The High Income Child Benefit Charge

High Income Child Benefit
Blog
UK Tax Point -
November 14, 2023

The High Income Child Benefit Charge (HICBC) was implemented in January 2013 to ensure that high earners pay back some or all of their child benefits. This charge applies to anyone with an income of more than £50,000 who receives child benefits or whose partner receives them.

 

How the High Income Child Benefit Charge works

Anyone required to pay the charge must pay an amount equal to all or a portion of the Child Benefit they are eligible to receive for themselves or their spouse. For taxpayers with earnings between £50,000 and £60,000, the tax rate steadily rises.

The amount a claimant receives is based on their “adjusted net income” and Child Benefit. Total taxable income less certain tax reliefs, such as those for trading losses (for self-employed individuals), Gift Aid donations, and pension contributions, is known as adjusted net income.

For every £100 of annual income exceeding £50,000, a family will be charged 1% of their Child Benefit. The fee will be the same as the whole amount of the Child Benefit if a person’s salary is beyond £60,000.

 

Paying the charge

People who must pay the charge must submit a self-assessment tax return every year, even if they are working, and usually spend their tax using the Pay As You Earn (PAYE) system.

 

How UK TAX POINT can assist you

If you need to pay the High Income Child Benefit Charge and are required to submit a self-assessment tax return, our experts will be able to assist you.

If HMRC has asked you to amend your previous years of self-assessment tax return because you received Child Benefit while your net income was above £50,000 for the tax year, we are here to help.

We are experienced in dealing with the High Income Child Benefit Charge and negotiate with HMRC on your behalf if necessary.

FAQs

 

  1. What is the High Income Child Benefit Charge?

The High Income Child Benefit Charge is a tax implemented in January 2013 to ensure that high earners pay back some or all of their child benefits.

 

  1. Who has to pay the High Income Child Benefit Charge?

Individuals with more than £50,000 who receive child benefits or whose partner receives them must pay the High Income Child Benefit Charge.

 

  1. How is the charge calculated?

For every £100 of annual income exceeding £50,000, a family will be charged 1% of their Child Benefit. If a person’s salary exceeds £60,000, the fee will be the same as the entire amount of the Child Benefit.

 

  1. How is the Child Benefit calculated?

The amount a claimant receives is based on their “adjusted net income” and Child Benefit. Adjusted net income is the total taxable income minus certain tax reliefs, such as those for trading losses (for self-employed persons), Gift Aid donations, and pension contributions.

 

  1. Do I have to file a self-assessment tax return?

Yes, those required to pay the charge must file a self-assessment tax return every year, even if employed, and typically make tax payments through the Pay As You Earn (PAYE) system.

 

  1. What happens if I don’t pay the High Income Child Benefit Charge?

You may face penalties and interest charges if you do not pay the High Income Child Benefit Charge.

 

  1. Can I claim Child Benefit if I earn over £50,000?

You can still claim Child Benefit if you earn over £50,000, but you must pay the High Income Child Benefit Charge.

 

  1. Can I appeal against the High Income Child Benefit Charge?

You can appeal against the High Income Child Benefit Charge if charged incorrectly.

 

  1. Can I get help paying the High Income Child Benefit Charge?

You may be eligible for a reduction or exemption if you need help paying the High Income Child Benefit Charge.

 

  1. How can the UK TAX POINT help with the High Income Child Benefit Charge?

UK TAX POINT can assist you with the High Income Child Benefit Charge by providing expert advice and negotiating with HMRC on your behalf if necessary. We can also help you file your self-assessment tax return and amend previous years’ returns if required.

 

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