Man in shirt sat at desk using a laptop, with baby sat on his lap
New service promised to assist parents liable to High Income Child Benefit Charge

At the Spring Statement, the Chancellor announced that from Summer 2025, employees who are liable to the High Income Child Benefit Charge (HICBC) will be able to report their family’s Child Benefit payments through a new digital service. 

Once live, this system will save parents from having to register for Self Assessment solely because of the HICBC, and will allow them to pay HICBC directly through PAYE. Some parents who currently submit tax returns may be able to stop filing annual returns. If you have higher earning employees, you may want to make them aware that this new service is coming.

What is HICBC?

HICBC was introduced in 2013 to claw back some or all of the Child Benefit received by households where either the claimant - or their partner if they have one - earns more than the income threshold. In a couple, the charge is paid by the higher earner, even if the Child Benefit is claimed by their partner.

The current income threshold is based on the higher earner’s adjusted net income. This is their income after deducting trading losses, donations through gift aid and pension contributions. For 2024/25 and 2025/26, the income threshold is £60,000. For every £200 over the threshold, 1% of the Child Benefit received must be repaid. Once the higher earner’s adjusted net income reaches £80,000, all the Child Benefit received in that year must be paid back.

For 2023/24 and earlier years, the income limits were lower, with HICBC applying to individuals with adjusted net income of over £50,000. In those years, 1% of the Child Benefit had to be repaid for every £100 over the threshold, meaning all Child Benefit was fully clawed back once the higher earner’s adjusted net income exceeded £60,000.

How is HICBC reported?

Currently, individuals liable to HICBC must register for Self-Assessment and file a tax return each year. This is an unwelcome administrative burden for employees used to having tax deducted under PAYE.

The new service is expected to make it simpler for individuals to manage their HICBC if they don’t otherwise need to be in Self-Assessment. We understand that individuals who are currently in Self-Assessment, but who are eligible for the new service, will be able to opt out of Self-Assessment and use the new service instead. At this stage, we do not know whether those with returns to file for 2024/25 to report their HICBC will be able to opt out, but it may be worth waiting until the new service is launched in the next few months to see if this is possible. If not, 2024/25 returns should be filed by 31 January 2026 as usual and individuals should be able to opt out of Self-Assessment in future years.

 

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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