High Income Child Benefit Charge; do the recent changes affect you?

If you or your partner has income in excess of the income threshold set by the government and you receive the child benefit for 1 or more of your children, you may be required to pay additional tax, labeled the High Income Child Benefit Charge (HICBC).

From 6 April 2024, the rules of the HICBC have been changed to attempt to deal with anomalies within the tax charges.

Child Benefit is a financial benefit from the government to give support to parents looking after their children.

The amount you receive is as below, paid every 4 weeks, and can be claimed until your child reaches the age of 16:

• £25.60 per week for your first child
• £16.95 per week for any other children

If you earn over the relevant thresholds, you may be at risk of having to repay the benefit to HMRC.

From 6 April 2024, the threshold for ‘adjusted net income’ (ANI – see below), when the High Income Child Benefit Charge (HICBC) will be payable, has changed. This change could affect you if:

• You are claiming Child Benefit and currently paying back some or all of the benefit
• You were claiming Child Benefit but have opted out of receiving payments
• You have a child but you have not claimed Child benefit

This change is temporary, and further changes will be made in April 2026.

Key fact – claiming Child Benefit could be important if your income is less than the threshold where you achieve a state pension credit, as you may get credit by claiming the benefit

Previous rules for HICBC:

Prior to 5 April 2024, there was a significant unfairness in the way that the HICBC was calculated.

The charge was calculated based on the higher earning parent in a household and did not consider the other earner. This potentially created an unfair advantage for couples who both earn, compared to single income couples. For example, for a couple where both individuals had an ANI of £49,999 each (total £99,998), no HICBC would be payable. Whereas for a couple (or single person) where one person had an ANI that exceeded £50,000, the HICBC was payable regardless of the total household ANI.

To calculate what you need to repay, you will need to calculate your ANI – see below. For every £100 of ANI over £50,000, you would be required to repay 1% of the Child Benefit received. For example, if your ANI was £55,000, you would be required to repay 50% of the Child Benefit received.

If your ANI was £60,000 or above, you would be required to repay 100% of the benefit back to HMRC.

In the Spring Budget, the Chancellor addressed this, and proposed an interim change along with a longer term change in legislation.

New rules – the interim period:

The government announced that it would remove this anomaly. 

In the interim period from 6 April 2024, the ANI threshold will increase to £60,000 [previously £50,000] with the limit whereby the whole Child Benefit is repaid to HMRC is increased to £80,000 [previously £60,000]. Therefore, the HICBC will not be due unless the higher earning parent has ANI in excess of £60,000. 

This means that the calculation of the HICBC has changed - the new interim rules mean that the charge is calculated as 1% for every £200 of ANI over the £60,000 threshold.

Future rules:

Although there is no formal legislation in place, the Chancellor announced plans to reform how the HICBC is calculated from April 2026.  The charge will be based on a ‘fairer basis’, and household income will be considered, rather than an individual’s income.

How much HICBC will I need to pay and what is ‘Adjusted Net Income’ (ANI):

If your ANI exceeds £60,000, you will need to check and monitor your income.  As stated above, the HICBC is based on your ANI.  

In essence, your ANI is your total taxable income, including any benefits received from your employment (like a company car) and it can be reduced if you make personal pension contributions, or gift aided donations - the full guidance can be found here.

There is a helpful HMRC calculator which is free to use to calculate what the HICBC will be.

If you have not yet claimed your Child Benefit:

It’s not too late to claim. Child Benefit will be backdated to 3 months from the claim or the birth date of the child if more recent.

You can make a claim by either:

• Claiming online 
• Claiming through the HMRC App 

How can Haines Watts help?

We advise clients with a broad range of tax and compliance matters throughout the South West region.

If you want any further information about the HICBC or wish to discuss or estimate how much you will expect to repay, please get in touch with your usual Haines Watts contact.