Policy paper

Issue briefing: High Income Child Benefit Charge

Updated 3 October 2018

1. The High Income Child Benefit Charge

The High Income Child Benefit Charge is a tax charge that applies to anyone with an income over £50,000 who claims Child Benefit, or whose partner claims it.

2. How the charge works

Anyone who has to pay the charge will need to pay an amount equivalent to some or all of the Child Benefit that they or their partner is entitled to receive.

The charge is equal to one per cent of a family’s Child Benefit for every extra £100 of income that is over £50,000 each year. If an individual’s income is over £60,000, the charge will equal the total amount of the Child Benefit.

The amount to pay depends on an individual’s ‘adjusted net income’, and the amount of Child Benefit the claimant is entitled to. Adjusted net income is total taxable income less certain tax reliefs, for example for: trading losses (for the self-employed), Gift Aid charity donations, and pension contributions.

Families can use the Child Benefit calculator to work out how much tax they may have to pay.

3. Paying the charge

Individuals who need to pay the charge who are employed, and normally pay their tax through Pay As You Earn (PAYE), will need submit a Self Assessment tax return each tax year.

The highest income earner should put the Child Benefit payments on their Self Assessment tax return for each year they get them.

In November 2018 HMRC announced that it is reviewing cases where a Failure to Notify penalty was issued for the tax years 2013 to 2014, 2014 to 2015 and 2015 to 2016 to customers who did not register for the High Income Child Benefit Charge.

4. What people need to do

If an individual is currently receiving Child Benefit they can either:

• carry on getting Child Benefit payments and pay any charge at the end of each tax year via Self Assessment
• choose not to receive Child Benefit payments and not have to pay the tax charge

If an individual is claiming Child Benefit for the first time, they should still claim Child Benefit for their child or children, as it can help to protect State Pension contributions and will make sure the child or children receive a National Insurance number. They can then choose to either receive the payments and pay the charge, or stop the payments and not pay the charge.

4.1 Continuing to receive Child Benefit payments

To do this, individuals will need to fill in a Self Assessment tax return so that HMRC can calculate the extra amount they’ll have to pay. The Child Benefit claimant might wish to keep getting Child Benefit payments if the taxpayer’s income is between £50,000 and £60,000, as the tax charge will always be less than the amount of benefit.

4.2 Stopping Child Benefit payments

An individual can stop receiving Child Benefit payments. This means they or their partner will not have to pay the charge. Only the Child Benefit claimant can ask to have the payments stopped.

The Child Benefit claimant can restart payments at any time if their circumstances change.

5. Guidance and further information

Read full customer guidance on the High Income Child Benefit Charge.

If customers stop receiving Child Benefit payments after 6 April each year they still need to register for Self Assessment and pay the tax charge for the time from 6 April until they stopped receiving payments.

Parents on higher incomes who receive Child Benefit must register for Self Assessment by 5 October after the end of the tax year in which they received the payments to avoid paying any penalties for failing to notify HMRC on time.