HMRC have launched a digital service allowing Child Benefit claimants to opt in or out of receiving payments. This should help households who would previously have had to pay the High Income Child Benefit Charge (HICBC) to opt back in to receiving payments if the increased HICBC thresholds mean they would now be better off receiving Child Benefit payments.

What is HICBC?

The HICBC progressively claws back Child Benefit from households where a parent or their partner has adjusted net income of over £60,000. By the time that person’s income reaches £80,000, all the Child Benefit received in a tax year must effectively be paid back.

Until 6 April 2024, the income level above which the HICBC applied was set at £50,000, with full clawback occurring once income exceeded £60,000. These figures had been unchanged since 2013. As a result, households where either partner has income over £50,000 may have opted out of receiving Child Benefit payments in order to avoid registering for self-assessment to pay the HICBC.

We covered the implications of changes to HICBC from 6 April 2024 in a previous edition of Employer Focus. As a result of these changes, some households who previously opted out of receiving Child Benefit payments could now be missing out on valuable financial support if they don’t opt back in.

We’ve made a short video about HICBC as a reminder of how it works, but it’s important to remember that claiming Child Benefit and opting out of receiving payments are two separate things.  You must be registered as claiming Child Benefit in order to opt in or out of payments. Parents who aren’t claiming Child Benefit will not be able to use the digital opt in/out service for payments, and will also miss out on other advantages of claiming which we mentioned in our previous article.

Digital services make life easier

The digital service allows Child Benefit claimants to opt back in to payments for the current tax year, and the two prior tax years, as long as doing so would not result in the payments being fully clawed back via the HICBC. So, if the higher earner’s income is more than £80,000 for the current tax year, or is more than £60,000 for the two previous years, backdated payments for those years will not be possible.

Anyone considering claiming backdated payments will need to be aware that if the adjusted net income of their household’s higher earner will be between £60,000 and £80,000 for the current tax year, that person will need to file a Self-Assessment return in order to pay the HICBC, although this will only result in losing part of their Child Benefit received. Similarly, backdated payments for the two previous tax years will create a HICBC liability for households where the higher earner had income of between £50,000 and £60,000 in either year. Professional advice may be needed to declare this liability to HMRC.

Child Benefit claimants can also use the digital service to stop payments if their circumstances change – for instance if they or their partner are promoted or get a pay rise and the HICBC would become payable as a result of their increased income.

The digital service is the fastest way to make changes to Child Benefit payments, and can be used to opt out or back in to payments whenever needed. 

 

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.  

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