If either you or your partner has adjusted net income over £60,000, you may be affected by the High Income Child Benefit Charge. A surprising number of higher-earning parents either do not realise it applies to them or are not handling it correctly.
The rules changed significantly from April 2024. The threshold at which the charge begins increased from £50,000 to £60,000, and Child Benefit is now fully withdrawn at £80,000 rather than £60,000. This means some families who previously lost all their Child Benefit now keep part of it, while others still need to manage the charge carefully through PAYE or Self Assessment.
The key facts are these: Child Benefit starts being clawed back once the higher earner’s adjusted net income exceeds £60,000, and it is fully withdrawn once that income reaches £80,000. The charge can be collected through Self Assessment or, in some cases, through PAYE. And critically, your income for these purposes is adjusted net income, not simply your gross salary, which means there are legitimate ways to reduce the amount you are charged.
What Is the High Income Child Benefit Charge?
Child Benefit is a payment made to parents or guardians responsible for children under 16, or under 20 if they remain in approved education or training.
For 2026/27, the rates are:
- £27.05 per week for your eldest or only child, which is £1,406.60 per year
- £17.90 per week for each additional child, which is £930.80 per year per child
A family with 2 children therefore receives £2,337.40 in Child Benefit annually.
The High Income Child Benefit Charge, known as HICBC, was introduced in 2013 to withdraw Child Benefit from higher earners. From 2024/25 onwards, the charge works by clawing back 1% of the total Child Benefit received for every £200 of adjusted net income above £60,000. Once adjusted net income reaches £80,000, 100% of the Child Benefit is effectively clawed back through the tax system.
What Changed in April 2024?
Before 6 April 2024, the charge started at £50,000 and withdrew Child Benefit completely at £60,000. This had not changed since the charge was first introduced in 2013, despite wage growth over that period. The result was that more families were pulled into the charge over time.
The Spring Budget 2024 increased both thresholds, effective from 6 April 2024.
| Before April 2024 | From April 2024 | |
|---|---|---|
| Charge starts | £50,000 | £60,000 |
| Full withdrawal | £60,000 | £80,000 |
| Charge rate | 1% per £100 over threshold | 1% per £200 over threshold |
| Child Benefit clawed back at £70,000 | 100% | 50% |
| Child Benefit clawed back at £75,000 | 100% | 75% |
The practical effect is that many families who previously had all their Child Benefit clawed back now retain some of it, and families earning between £60,000 and £80,000 face a partial rather than complete withdrawal.
If your income is in the £60,000 to £80,000 range, it is worth checking whether you have been claiming Child Benefit and, if not, whether it is worth restarting your claim and managing the charge correctly.
How the Charge Is Calculated
The charge is calculated on the higher earner’s adjusted net income, not on combined household income. This is an important distinction.
A couple where both partners earn £55,000 each, for a combined income of £110,000, would pay no HICBC because neither person has adjusted net income above £60,000. A couple where one person earns £75,000 and the other earns nothing would face the charge, despite having a lower combined income.
For the higher earner in this second example, the calculation works as follows.
Their income exceeds the £60,000 threshold by £15,000. Dividing £15,000 by £200 gives 75. The charge is therefore 75% of the total Child Benefit received.
For a family with 2 children receiving £2,337.40 in Child Benefit in 2026/27, the charge would be 75% of £2,337.40, which is £1,753.05. They keep £584.35 net of the charge.
Understanding UK income tax thresholds and rates is relevant context here, because the HICBC sits on top of your existing income tax liability rather than replacing any part of it.
Our tax tables for 2025/26 are a useful reference for keeping key thresholds in one place, though you should always check current-year figures before making decisions.
What Is Adjusted Net Income?
Adjusted net income is not the same as your gross salary. It is broadly your total taxable income from all sources before Personal Allowance, less certain tax reliefs.
Income that can count includes:
- Salary and bonuses
- Self-employed profits
- Dividends
- Savings interest
- Rental profits
- Employment benefits, such as a company car or private medical insurance
- Pension income
The main deductions that can reduce adjusted net income include:
- Gross personal pension contributions
- Gift Aid donations, grossed up for tax
- Certain allowable trading losses or other reliefs, depending on your circumstances
This matters enormously for planning purposes, because reducing your adjusted net income below £60,000 eliminates the charge entirely, and reducing it within the £60,000 to £80,000 band reduces the amount clawed back proportionally.
If your income is £65,000 and you make a gross pension contribution of £6,000, your adjusted net income may fall to £59,000. That would bring you below the charge threshold and allow you to keep your Child Benefit in full.
For parents who are also business owners or self-employed, your taxable profits, pension contributions, allowable expenses and timing of income all deserve careful attention. Our guide to self-employed National Insurance gives useful wider context for those whose income comes through self-employment.
Using Pension Contributions to Manage the Charge
Pension contributions are one of the most commonly used tools for reducing adjusted net income below the HICBC threshold or reducing it within the taper. The logic is straightforward. A gross pension contribution can reduce your adjusted net income, and you may also receive tax relief on the contribution.
For example, if you make a gross pension contribution of £1,000, your adjusted net income can reduce by £1,000. Within the HICBC taper, that £1,000 reduction could reduce the charge by 5% of your annual Child Benefit.
For a family with 2 children receiving £2,337.40 in Child Benefit in 2026/27, a £1,000 reduction in adjusted net income within the taper could reduce the HICBC by around £116.87. This saving comes on top of the normal pension tax relief, which is why pension planning can be so powerful for higher-earning parents.
If you are employed, contributions made through salary sacrifice can be especially efficient because they reduce your contractual pay before tax and National Insurance are calculated. Personal pension contributions paid outside payroll can also reduce adjusted net income, but the mechanism is different.
For company directors and self-employed business owners, employer pension contributions made by the company are also worth reviewing as part of this planning conversation. This is an area where working with a tax return accountant who understands the interaction between business and personal tax makes a significant difference.
Should You Opt Out of Child Benefit?
When the HICBC was at its most punishing under the old rules, many higher earners chose to opt out of receiving Child Benefit payments altogether, reasoning that it was not worth the administrative burden of paying the charge back. That thinking made some sense when the full amount was clawed back at £60,000.
With the current thresholds, the calculation is different. If your adjusted net income is £65,000, you now keep 75% of your Child Benefit under the rules introduced from April 2024. Opting out of payments would mean giving up that 75% for no reason.
There is also a more important reason to claim Child Benefit even if the charge eventually eliminates the payment. Claiming Child Benefit protects entitlements that are easy to overlook.
- If the non-working or lower-earning parent claims Child Benefit, they can receive National Insurance credits for each week the child is under 12, which helps protect State Pension entitlement
- Children are usually automatically registered for a National Insurance number before their 16th birthday through the Child Benefit system
- If a parent returns to work after a period of caring, their NI record may be protected during the gap
These are benefits that exist outside the immediate cash calculation and are worth preserving. Our guide on employee National Insurance contributions gives useful background on how NI records work and why gaps can matter.
If you do not want to receive the payments because the charge would claw them all back, you can claim Child Benefit but opt out of receiving payments. That protects the National Insurance credit position without creating the same cash repayment issue.
Self Assessment, PAYE and the HICBC
If you are liable for the HICBC, you need to make sure HMRC collects it correctly. Historically, this usually meant registering for Self Assessment and filing a tax return, even for salaried employees whose income tax was otherwise collected through PAYE.
For 2024/25 onwards, HMRC allows some taxpayers to pay the charge through PAYE if they do not need to file a tax return for another reason and meet the relevant conditions. However, many higher earners will still need to use Self Assessment, especially if they are self-employed, have rental income, receive dividends, or have other tax reporting obligations.
If you do need to register for Self Assessment, you should usually do so by 5 October following the tax year in which you first became liable for the charge. Our guide to UTR numbers explains what this is and how to apply for one if you do not already have it.
If you have been receiving Child Benefit for several years while earning above the threshold and have not declared the charge, you may have unpaid HICBC for earlier years. HMRC can assess past years and penalties may apply, depending on the circumstances. Taking advice from a chartered accountants stockport practice as soon as you realise there is a problem is the right first step. Voluntary disclosure is usually better than waiting for HMRC to contact you.
Your P60 guide is worth reading too, as your P60 is often the starting point for confirming employment income when completing your tax return or checking your adjusted net income.
Two-Earner Households and the Fairness Question
One of the most widely criticised aspects of the HICBC is that it is assessed on individual rather than household income.
A couple where both earn £59,000 each can have household income of £118,000 and pay no HICBC. A single earner on £65,000 with a non-working partner has a much lower household income but may pay the charge.
The previous government had proposed moving the charge to a household income basis, but that reform is not proceeding. For now, the individual income test remains in place.
If you are in a single-earner household, the pension contribution strategy can be especially valuable. Bringing your individual adjusted net income below £60,000 eliminates the charge entirely, regardless of household circumstances.
If you are in a 2-earner household and both incomes are below the threshold, neither of you needs to do anything differently for HICBC purposes. But if one of you is approaching £60,000, it is worth tracking adjusted net income carefully throughout the year. Our Self-Employed Tax Calculator and Take-Home Pay Calculator can help you model your income position.
What If You Are Self-Employed or Run Your Own Company?
For self-employed people and company owner-directors, the HICBC interacts with your business finances in ways that are worth understanding properly.
If you are a sole trader, your taxable trading profit is part of your income for HICBC purposes. Legitimate business expenses and allowable reliefs reduce your taxable profit and therefore reduce your adjusted net income. Getting your small business bookkeeping records right ensures you are only paying the charge on your actual net income, not on a figure inflated by costs that should have been deducted.
If you run a limited company and take a combination of salary and dividends, both can count towards your adjusted net income. Dividends still count for adjusted net income purposes even if they fall within the dividend allowance, because the dividend allowance is a zero-rate band rather than a deduction from income.
The level of salary and dividends you draw is therefore a planning lever, but it needs to be balanced against your broader tax position, company cash flow and pension planning.
Working with a corporation tax for small businesses uk specialist who also understands your personal tax position means these decisions are made with the whole picture in view rather than optimising one element at the expense of another. If you have a directors loan account position as well, that also needs to be factored in.
Our guide on how to reduce corporation tax covers legitimate approaches that can also have indirect benefits for your personal income position by reducing the need to draw as much from the company.
Keeping Track Throughout the Year
The HICBC creates a situation where the tax you owe at the end of the year depends on decisions made throughout the year about pension contributions, salary levels and dividend draws. If you only look at your tax position after the year has ended, you may already have lost the ability to influence it for that year.
Using a management accounts service to review your finances monthly means you can track your projected adjusted net income throughout the year and make adjustments before the year closes. If your income is running higher than expected and you are approaching the £60,000 threshold, making additional pension contributions before 5 April can bring your adjusted net income down in time to affect the current year’s charge.
Understanding how management accounts help directors control business spending applies here even if the context is personal rather than purely business. The principle is the same: visibility throughout the year enables decisions that are not available after the event.
For employed parents without their own business, payroll records are the key source of information. If you use payroll accountants Stockport professionals for your business, they can also help you understand the payroll implications of salary sacrifice arrangements you are considering.
Inheritance Tax and Child Benefit Planning
For higher earners who are also thinking about their longer-term financial position, the HICBC planning conversation often connects naturally to broader estate planning.
Pension contributions can reduce your adjusted net income and therefore your HICBC liability, while also building your retirement savings in a tax-efficient way. However, pension and Inheritance Tax planning needs careful review because most unused pension funds and pension death benefits are due to be brought within the value of a person’s estate for Inheritance Tax from 6 April 2027.
That means pensions can still be valuable for retirement and income tax planning, but they should not be viewed in isolation as a simple Inheritance Tax shelter.
Our guide to 3 inheritance tax reliefs families often overlook is worth reading for higher earners who are building wealth and have not yet thought about how that wealth will be passed on. The interaction between pension savings, IHT planning and income tax management is increasingly important as families accumulate assets.
Bookkeeping and Record-Keeping for the HICBC
Filing an accurate tax return or confirming the correct HICBC position requires good records. You need to know your total income from all sources, the full amount of Child Benefit received during the tax year, your pension contributions, and any Gift Aid donations.
If your records are not well organised, pulling all of this together at the end of the tax year becomes unnecessarily stressful. Bookkeeping in stockport that use our services benefit from records that are kept up to date throughout the year, meaning the information needed for any tax return is already there rather than having to be reconstructed.
A Xero certified accountant can also help you set up your accounting records in a way that makes it straightforward to extract the figures you need for both your business tax returns and your personal tax filing.
Thinking About Your Wider Tax Exposure
The HICBC is one of several ways in which earnings in the £60,000 to £100,000 range can face higher effective tax rates in the UK. The Personal Allowance is also tapered away between £100,000 and £125,140, creating an effective marginal income tax rate of 60% on some types of income in that band. The HICBC sits within this broader picture of high marginal rates for middle-to-upper earners.
For some business owners and high earners, the cumulative effect of income tax, National Insurance, the HICBC, pension decisions and the loss of the Personal Allowance makes a compelling case for reviewing their overall structure. Our guide on mortgage interest tax relief is also relevant for those who own rental properties alongside their main income, as finance cost restrictions have added another layer of complexity to the income picture for higher earners with property portfolios.
For those at the more significant end of the income spectrum who are genuinely reviewing whether the UK remains the right base for their business and personal finances, our move business to dubai from uk advisory service can provide a clear picture of what an alternative structure might look like.
FAQs: High Income Child Benefit Charge
What is the current threshold for the High Income Child Benefit Charge?
From 6 April 2024, the charge begins when the higher earner’s adjusted net income exceeds £60,000. Child Benefit is fully clawed back once adjusted net income reaches £80,000.
Do both partners’ incomes count for the HICBC?
No. The charge is based on the adjusted net income of the higher-earning partner individually, not on combined household income. If both partners earn below £60,000, no charge applies, regardless of your combined income.
What happens if I did not know I was liable and have not declared the charge?
You should take advice and contact HMRC as soon as possible. Depending on your circumstances, you may need to register for Self Assessment, amend past returns, or make a disclosure. HMRC can assess earlier years, and penalties may apply if you failed to notify them when you should have done.
Can I opt back into Child Benefit if I previously opted out?
Yes. If you previously opted out of receiving payments, you can restart your Child Benefit payments. If you never made a claim, you can make one, although backdating is usually limited. Restarting can be worthwhile if your income has fallen below the threshold or if you want to protect National Insurance credits.
Does the HICBC apply to Child Benefit for stepchildren or children for whom you are the main carer?
The charge can apply where you or your partner receive Child Benefit for a child, including a child who is not biologically yours, if the household circumstances meet the rules. The key point is who receives Child Benefit and who in the household has adjusted net income over the threshold.
If I pay into a pension through my employer, does that reduce my adjusted net income?
It depends on the type of contribution. Salary sacrifice pension contributions reduce your contractual pay before tax, which can reduce adjusted net income. Personal contributions paid outside salary sacrifice can also reduce adjusted net income when grossed up, but the mechanism is different.
Does the HICBC apply to guardians and foster carers?
Child Benefit can be payable to people responsible for a qualifying child, including guardians and some carers, depending on the circumstances. The HICBC can apply if the claimant or their partner has adjusted net income over the threshold. Foster care situations can be more complex, especially where local authority payments are involved, so advice may be needed.
Get Clarity on Your Child Benefit Position
The HICBC catches a lot of higher-earning parents who are not aware it applies to them, or who have not adjusted their approach since the April 2024 rule changes. Getting your position right, whether that means registering for Self Assessment, arranging PAYE collection, reviewing your pension contributions, or restarting Child Benefit payments you had previously stopped, is worth doing sooner rather than later.
At U&W Chartered Accountants, we help higher-earning individuals across Stockport understand their personal tax obligations and plan effectively for them. Whether you need support with Self Assessment filing, pension planning, or a broader review of your tax position, we are here.
Find out more about our team on our about page or get in touch via our contact page. You can also get an instant quote for your limited company or as a sole trader to see how our services work.
