Child's outstretched palms holding coins, resting inside adult's outstretched palms
Back to basics: High Income Child Benefit Charge

The High Income Child Benefit Charge (HICBC) has applied since 7 January 2013 as a way of clawing back Child Benefit from households with higher incomes.

It was originally charged on households receiving Child Benefit if there was a taxpayer with an “adjusted net income” above £50,000, but this increased to £60,000 from 6 April 2024. Adjusted net income is a taxpayer’s taxable income less tax reliefs like gross Gift Aid donations and pension contributions.

How HICBC works

Regardless of which partner claims Child Benefit, HICBC is charged on the higher earner in the household. This can mean that the charge is paid by a taxpayer who is not the parent of the child(ren) in the Child Benefit claim.

Since April 2024, the clawback of Child Benefit is at a rate of 1% of the Child Benefit received for every £200 of adjusted net income above £60,000. This means the Child Benefit is completely withdrawn if a taxpayer in the household has adjusted net income above £80,000. Our short video on HICBC helps to explain the rules.

The HICBC threshold applies on an individual basis, which can create surprising results depending on how the income in a household is split between partners. For example, a household with two partners with adjusted net income of £59,999 each (total £119,998) would not have any claw back, but a household where one partner has adjusted net income of £80,000 would have the Child Benefit clawed back in full via HICBC.

Paying HICBC

To settle any HICBC liability, taxpayers have previously had to either opt out of Child Benefit payments or register for self-assessment by the 5 October following the end of the tax year so they can pay the HICBC via a self-assessment tax return.

Where the total liability due to HMRC was below £2,000, there was the opportunity for taxpayers to have the HICBC collected via their PAYE coding notice for a later tax year, but there was not the ability for the HICBC to be paid in real time.

These options are still available, but HMRC also introduced a new HICBC service in September 2025, as a means of allowing employees to pay their HICBC via PAYE where they have no other reason to complete a self-assessment tax return. The aim is to save them from having to file a tax return, and allow them to pay the HICBC in the tax year that the charge relates to, although this will depend on when they sign up.

Where the new HICBC service can be used

Individuals have until the 31 January after the end of the tax year to register for the service, so unless they have already done so, there is only a narrow window until 31 January 2026 to use the service for the 2024/25 tax year. If they have previously been registered for self-assessment, it will be necessary for them to first deregister from self-assessment before using the service. 

As long as they have not submitted their 2024/25 tax return already, individuals signing up in January 2026 will have the option of settling their 2024/25 HICBC and 2025/26 HICBC liability using the new service to adjust their PAYE coding notice. This will result in two HICBC amounts being recovered in the 2025/26 tax year, before moving to the HICBC being collected in real time from 2026/27. Individuals choosing this option will need to be mindful of the impact on their take-home pay in 2025/26, as the monthly deductions to pay the HICBC will be for two years at once.

When a taxpayer signs up for the new service, they will need to have a note of their partner’s National Insurance number if their partner is the Child Benefit claimant, as well as the dates of any relationship changes in the year. HMRC may also ask for proof of identity, such as a passport or driving licence when signing into the new service.

How HICBC affects employers

As HICBC is essentially a tax charge on employees, it should not directly affect employers, although they may notice changes to the PAYE coding notices of those employees using the new service.

However, HICBC may have an impact on pay discussions with employees if any additional pay would put an employee above the HICBC threshold, as any additional pay would be subject to Income Tax, National Insurance and HICBC.

In some cases, employees might opt for salary sacrifice to reduce their adjusted net income to lower their HICBC exposure. For example, the employee may wish to sacrifice part of their salary for employer pension contributions, electric cars or a cycle to work scheme.

If employees are unsure about their HICBC position, they may wish to contact HMRC or seek tax advice.

 

This article reflects the position at the date of publication shown above. If you are reading this at a later date you are advised to check that that position has not changed in the time since.  

We regularly publish articles on a range of tax and wider topical issues which affect employers. If you wish to subscribe to our monthly Employer Focus e-newsletter, please contact us.