The High Income Child Benefit Charge (HICBC) is a tax charge, not a cut in your payment. If you or your partner receive Child Benefit and one of you has income above a threshold, the higher earner repays some or all of it through the tax system. It is one of the most common reasons an employee who has never filed a return ends up in Self Assessment.
The income test
gov.uk's High Income Child Benefit Tax Charge page says the test looks at your adjusted net income. That is your total taxable income, including savings interest and dividends, worked out before personal allowances and after certain reliefs such as pension contributions and Gift Aid.
- From the 2024/25 tax year, the threshold is £60,000.
- Up to and including 2023/24, it was £50,000.
If you and your partner both have income over the threshold, the higher earner pays the charge.
How the charge is calculated
From 2024/25 you repay 1% of your Child Benefit for every £200 of income over £60,000, and you repay all of it at £80,000 or more. Under the earlier rules the scale was 1% for every £100 over £50,000.
Worked example for 2025/26 (illustrative figures): you receive £2,000 of Child Benefit over the year and your adjusted net income is £70,000.
- Income over the threshold: £70,000 minus £60,000 is £10,000.
- Steps of £200: £10,000 divided by £200 is 50.
- Charge: 50% of £2,000, which is £1,000.
At £80,000 or more the charge equals the whole £2,000. Between those points the charge rises smoothly, so a small drop in adjusted net income can save a meaningful amount.
Reducing adjusted net income
Because the test uses adjusted net income, anything that lowers it before the test counts. gov.uk names pension contributions and Gift Aid donations. If your income sits just above £60,000, a pension contribution or a Gift Aid donation can cut the charge. How much it helps depends on your whole income picture, so work the numbers through before relying on it.
Paying the charge
You can pay through PAYE or through Self Assessment. The charge is worked out by the legislation (ITEPA 2003, s681C), which rounds the percentage down to a whole number, so only full £200 slices of income count.
- PAYE: you register with HMRC and it sends a new tax code to you and your employer (or pension provider), so the charge is collected from your pay across the year. gov.uk says you can use this only if you do not need to send a return for another reason, and you are paying for the current or previous tax year on or before 31 January after the tax year you are paying for.
- Self Assessment: you report the Child Benefit received and pay the charge as part of your bill. gov.uk says you must use Self Assessment if you already need to send a return for another reason, such as self-employment or savings and investment income, or if you pay after 31 January in the year after the tax year.
If you need a return only because of HICBC, register by 5 October after the tax year ends: our registration guide explains the rule. To move back from Self Assessment to PAYE later, gov.uk says to contact HMRC by phone. If HICBC was your only reason to file, see how to stop filing Self Assessment.
Opting out of payments
You have a choice. You can keep receiving Child Benefit and pay the charge, or opt out of the payments so that no charge arises. gov.uk is clear that opting out does not cost the National Insurance credits or the child's National Insurance number. Opting out can make sense when your income will stay above £80,000, because the charge would take back the whole payment. If your income hovers around the threshold, keeping the payments and paying the charge may be better.
Common mistakes
- Using taxable pay instead of adjusted net income, which includes dividends and rental profit.
- Forgetting the partner's income when the higher earner is not the Child Benefit claimant.
- Forgetting that dividends, savings interest and rental profit all count towards adjusted net income. Profit worked out with the trading allowance also counts, at the lower figure.
- Overlooking the deadlines: through Self Assessment the charge is due by 31 January, alongside your balancing payment.
How ac-co helps
ac-co drafts your SA100 from your bank, books and HMRC data, shows the full tax computation and files only after you approve it. Have your Child Benefit totals for the year to hand when you review the draft.