Child Benefit High Income Charge: The £60k Cliff Edge Explained

The High Income Child Benefit Charge (HICBC) is a tax charge that claws back Child Benefit from families where one parent earns over £60,000. For every £200 of income above £60,000, you lose 1% of your Child Benefit. At £80,000, you lose it all.

This affects the higher earner in the household, regardless of who actually claims the benefit.

#How Much Is Child Benefit Worth?

For the 2024/25 tax year:

• First child: £25.60 per week (£1,331.20 per year)
• Each additional child: £16.95 per week (£881.40 per year)

A family with two children receives £2,212.60 per year. A family with three children receives £3,094 per year.

#The Taper: £60,000 to £80,000

The charge phases in gradually between £60,000 and £80,000 of adjusted net income.

For every £200 you earn above £60,000, you lose 1% of your Child Benefit. The maths: (£80,000 - £60,000) ÷ £200 = 100 steps of 1%.

#What Counts as Income?

The charge is based on "adjusted net income" which includes:

• Salary (before salary sacrifice deductions are removed)
• Bonuses
• Taxable benefits in kind
• Self-employment profits
• Rental income
• Dividend income
• Interest above your Personal Savings Allowance

What reduces your adjusted net income:

• Pension contributions (including salary sacrifice)
• Gift Aid donations
• Trading losses

Note: salary sacrifice pension contributions reduce your adjusted net income. Standard pension contributions through net pay arrangements also reduce it.

#The Calculation

Here's how HICBC works for a family with two children (£2,212.60 annual benefit) where one parent earns £70,000:

1. Income over threshold: £70,000 - £60,000 = £10,000
2. Number of £200 chunks: £10,000 ÷ £200 = 50
3. Percentage clawed back: 50%
4. Charge: £2,212.60 × 50% = £1,106.30

The parent earning £70,000 owes £1,106.30 through their Self Assessment tax return. The family keeps £1,106.30 of the Child Benefit.

#Should You Still Claim Child Benefit?

Yes. Almost always.

Even if you'll lose 100% to the charge, claiming Child Benefit protects your National Insurance record. The parent who claims (typically the one not working or earning less) receives National Insurance credits for each week they're responsible for a child under 12.

These credits count towards your State Pension. Missing them could reduce your State Pension by up to £328.42 per year for each missing year of credits.

If you don't want the payments, you can claim Child Benefit but opt out of receiving the money. You still get the NI credits without having to pay the charge.

#Three Ways to Reduce or Avoid the Charge

#1. Salary Sacrifice into Your Pension

Pension contributions via salary sacrifice reduce your adjusted net income. If you earn £70,000 and sacrifice £10,000 into your pension, your adjusted net income drops to £60,000. The HICBC disappears.

The numbers for a family with two children:

You've added £10,000 to your pension and kept an extra £1,106 of Child Benefit. Plus you've saved income tax and National Insurance on the sacrificed amount.

#2. Make Gift Aid Donations

Charitable donations through Gift Aid extend your basic rate band and reduce your adjusted net income. A £1,000 donation reduces your adjusted net income by £1,250 (the grossed-up amount).

This is less effective than pension contributions for pure tax efficiency, but if you're already planning to donate to charity, timing your donations can help manage the HICBC.

#3. Equalise Income Between Partners

HICBC is based on the higher earner's income, not household income. If one partner earns £80,000 and the other earns £40,000, you pay full HICBC. If both earn £60,000, you pay nothing.

Income equalisation is harder for employees but possible for:

• Business owners who can adjust salary/dividend splits
• Couples with joint rental income who can restructure ownership
• Families where one partner could reduce hours

#The Self Assessment Requirement

If you receive Child Benefit and your income exceeds £60,000, you must register for Self Assessment and file a tax return, even if you're employed and normally wouldn't need to.

HMRC cross-references Child Benefit claims against tax records. Not registering when required is a compliance risk.

If the charge equals your full Child Benefit, consider opting out of payments to avoid the Self Assessment requirement while keeping the NI credits.

#When Both Parents Earn Over £60,000

Only the higher earner pays the charge. If both parents earn £65,000, the charge is calculated on £65,000 (25% clawback), not £130,000.

If you earn exactly the same amount, HMRC will assess one of you. In practice, this is rare.

#Historical Thresholds

The HICBC threshold was £50,000 from its introduction in 2013 until April 2024, when it increased to £60,000. The upper threshold rose from £60,000 to £80,000 at the same time.

If you previously avoided pension contributions because you were above £60,000 anyway, recalculate. You might now benefit from contributing enough to get below the threshold.

#What BishBashDosh Shows You

The calculator models how pension contributions affect your HICBC liability. Enter your salary and number of children to see:

• Your current HICBC charge
• How much you'd need to contribute to eliminate it
• The combined value of tax relief, NI savings, and Child Benefit retention
• Whether contribution makes financial sense for your situation

#Frequently Asked Questions

#Do I pay the charge or does my partner?

The higher earner pays, regardless of who claims Child Benefit. If you earn £70,000 and your partner earns £30,000 and claims the benefit, you pay the charge.

#What if my income varies year to year?

The charge is calculated annually. A bonus that pushes you over £60,000 one year triggers the charge for that year only. If your income drops below £60,000 the next year, no charge applies.

#Can I pay monthly to spread the cost?

Yes. You can set up a budget payment plan with HMRC to spread your Self Assessment bill, including the HICBC, across the year.

#What if I didn't know about the charge?

HMRC can go back up to 20 years for deliberate non-compliance, or 6 years for careless errors. If you've been claiming Child Benefit while earning over the threshold without paying the charge, contact HMRC to regularise your position. Penalties are lower for voluntary disclosure.

#Does it affect other benefits?

No. HICBC only claws back Child Benefit. It doesn't affect Tax-Free Childcare, 30 Hours Free Childcare, or other means-tested benefits (which have their own income thresholds).

#What about shared custody?

Only one parent can claim Child Benefit per child. If you share custody and the other parent claims, you don't pay the charge even if you're the higher earner. The charge falls on whoever claims (or their higher-earning partner).