Child Benefit remains one of the UK’s most valuable financial supports for families. However, if you or your partner has a higher income, you may have to repay some or all of it through the High Income Child Benefit Charge (HICBC).
Since April 2024, the income thresholds have become more generous, meaning many families are now able to keep more of their Child Benefit before the charge applies.
Understanding how the rules work can help you avoid unexpected tax bills and identify legitimate ways to reduce or even eliminate the charge.
What Is the High Income Child Benefit Charge?
The High Income Child Benefit Charge is a tax charge that applies when either you or your partner has an adjusted net income above a specified threshold and someone in your household receives Child Benefit.
The charge is based on the income of the higher earner, regardless of which partner actually receives the Child Benefit payments.
What Is Adjusted Net Income?
Adjusted net income is not simply your salary.
It is broadly your total taxable income less certain tax reliefs, including qualifying pension contributions and Gift Aid donations.
This figure determines whether the High Income Child Benefit Charge applies and how much you may need to repay.
How Does the High Income Child Benefit Charge Work in 2025/26?
For the 2025/26 tax year, the rules are:
- Charge starts: Adjusted net income exceeds £60,000.
- Taper: You repay 1% of your Child Benefit for every £200 of adjusted net income above £60,000.
- Full repayment: Once adjusted net income reaches £80,000, the entire Child Benefit received is repaid through the tax charge.
Child Benefit Rates for 2025/26
For the 2025/26 tax year, Child Benefit is:
- £26.05 per week for your eldest or only child.
- £17.25 per week for each additional child.
For a family with two children, this totals approximately £2,251.60 per year.
Examples
To illustrate how the charge works for a family receiving Child Benefit for two children:
Income of £62,000
You are £2,000 over the threshold.
This results in a 10% repayment, meaning approximately £225.16 is repaid through the High Income Child Benefit Charge.
Income of £70,000
You are £10,000 above the threshold.
This results in a 50% repayment, meaning approximately:
- £1,125.80 for two children, or
- £677.30 for one child.
Income of £80,000 or More
Once adjusted net income reaches £80,000, the charge equals 100% of the Child Benefit received.
Can You Reduce the Charge?
In some cases, yes.
Because the charge is based on adjusted net income, reducing that figure may reduce—or even eliminate—the amount you need to repay.
Depending on your circumstances, this could include:
- Making qualifying pension contributions.
- Making Gift Aid donations.
- Reviewing other available tax reliefs.
Professional advice can help determine whether these options are appropriate for your situation.
Should You Stop Claiming Child Benefit?
Not necessarily.
Some families choose to receive the payments and repay some or all of the charge later through Self Assessment.
Others choose to opt out of receiving the payments to avoid a future tax bill.
However, if you are eligible, it is often sensible to submit a Child Benefit claim even if you opt out of receiving payments. This helps protect National Insurance credits towards the State Pension for the claimant and ensures your child is automatically issued a National Insurance number before their 16th birthday.
Common Mistakes
Some of the most common errors include:
- Assuming only the person receiving Child Benefit is affected.
- Forgetting to register for Self Assessment when required.
- Miscalculating adjusted net income.
- Missing opportunities to reduce adjusted net income through available tax reliefs.
- Opting out of Child Benefit without considering the impact on National Insurance credits.
How Business Management Consultation Can Help
Understanding the High Income Child Benefit Charge can be confusing, particularly if your income changes during the year.
At Business Management Consultation, we can help you:
- Calculate your adjusted net income.
- Determine whether the charge applies.
- Prepare and submit your Self Assessment tax return.
- Review pension and Gift Aid planning.
- Advise on legitimate ways to reduce the charge.
- Provide ongoing personal tax planning.
Our goal is to help you remain compliant while making the most of the tax reliefs available to you.
Conclusion
The High Income Child Benefit Charge doesn’t necessarily mean you should stop claiming Child Benefit. With careful planning and a clear understanding of the rules, many families can reduce unexpected tax bills and continue benefiting from valuable family support.
If you’re unsure how the rules apply to your household, professional advice can help you make informed decisions and avoid unnecessary costs.
Call us today on 01273 777 333 to arrange your free consultation.
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