If you or your partner earns over £60,000, you will have to repay some or all of your Child Benefit through a tax charge. But do not just stop claiming — here is why, and how to reduce or eliminate the charge.
The High Income Child Benefit Charge (HICBC) is a tax charge that claws back Child Benefit from families where one partner earns over £60,000 (from the 2024/25 tax year onwards — previously £50,000).
It is based on the income of the higher-earning partner, not combined household income. If one partner earns £80,000 and the other earns £0, the charge applies. If both partners earn £59,000 each (£118,000 total), there is no charge.
Between £60,000 and £80,000 adjusted net income, you repay a proportion of the Child Benefit — 1% of the benefit for every £200 of income above £60,000.
Above £80,000, you repay 100% of the Child Benefit through the tax charge. You still receive the benefit payments, but you give it all back via self-assessment.
Worked example at £70,000: Your income exceeds £60,000 by £10,000. That is 50 lots of £200, so you repay 50% of your Child Benefit.
Child Benefit for 2 children: £2,075/year. 50% charge = £1,037.50 repaid via self-assessment. You keep £1,037.50.
Worked example at £90,000: Income exceeds £80,000, so you repay 100% — £2,075 charge on self-assessment. Net benefit: £0 (but NI credits preserved — see below).
Even if you will repay 100% of the benefit, there are important reasons to keep claiming:
National Insurance credits: The parent who is not working (or earning below the NI threshold) automatically receives Class 3 NI credits for each Child Benefit claim. These credits count towards their state pension entitlement. Without them, a stay-at-home parent could miss out on up to £6,500/year in state pension.
You can opt out of receiving payments while still being registered for Child Benefit — this preserves the NI credits without triggering the charge. This is the best option if the higher earner is well above £80,000.
Income can fluctuate. If the higher earner's income drops below £60,000 in a future year (due to redundancy, career change, or pension contributions), the benefit payments automatically resume if you are still registered.
The HICBC is based on adjusted net income, not gross salary. Pension contributions reduce your adjusted net income. If you can bring it below £60,000, the charge is eliminated entirely.
Example: You earn £70,000 and contribute £10,000 to your pension. Your adjusted net income drops to £60,000 — no HICBC. The pension contribution gets 40% tax relief (£4,000) plus you keep the full Child Benefit (£2,075 for 2 children). Total benefit of the £10,000 pension contribution: £6,075 in tax relief and retained benefits, plus the pension growth.
Salary sacrifice is even more effective because it also reduces your National Insurance. The money goes straight from your employer to your pension before tax or NI are calculated.
Sweet spot: If your income is between £60,000 and £80,000, pension contributions can simultaneously give you 40% tax relief, eliminate the HICBC, and potentially restore some personal allowance if you are close to £100,000. Triple benefit.
If you or your partner earns over £60,000 and you receive Child Benefit payments, the higher earner must file a self-assessment tax return and report the HICBC.
The charge is calculated on the return and added to your tax bill. If you do not file, HMRC can issue penalties plus the charge itself with interest.
You can also ask HMRC to adjust your tax code so the charge is spread across your monthly pay, avoiding a large lump sum at self-assessment time.