High Income Child Benefit Tax Charge

You may have to pay additional tax if you receive child benefit and have income over £50,000

You are entitled to child benefit if you have parental responsibilities for children under the age of 16. It's the governments way of acknowledging the significant cost of raising a child and adds up to a valuable benefit over the course of childhood.

However, if you or your partner has adjusted income* of over £50,000 and one of you is receiving child benefit, then the higher earner may be subject to the 'High Income Child Benefit Charge' (HICBC). The charge is on a sliding scale so at an income of £60,000 it will amount to the whole of the child benefit. The higher earner will also have to complete a self assessment tax return each year.

The government has a calculator to help you check if and how much you might have to pay https://www.gov.uk/child-benefit-tax-calculator

What can you do?

• If the adjusted income of the higher earner is between £50,000 and £60,000 there is still some value in receiving the child benefit, but they must register for self assessment and complete an annual tax return

• If the adjusted income of the higher earner is more than £60,000 (so there is no net value to receiving the child benefit) you can opt out of receiving child benefit payments by filling in an online form here https://www.gov.uk/child-benefit-tax-charge/stop-child-benefit

• If you do opt out it is still worth registering your 'entitlement' to child benefit as you will get national insurance credits which help count towards your state pension entitlement. It will also ensure your child receives their own national insurance number shortly before they turn 16

• If your circumstances change, you can opt back in and start receiving child benefit again, opt back in here https://www.gov.uk/child-benefit-tax-charge/restart-child-benefit You can stop or restart the child benefit at any time.

• It may also be possible to structure your business affairs to ensure that you and your partner are below the adjusted income threshold. An accountant or financial advisor can help.

*adjusted income

adjusted income is all income (employed, self employed, rental etc) after taking away any tax-deductible expenses or pre-tax pension contributions

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