What is the High Income Child Benefit Charge?
The High Income Child Benefit Charge (HICBC) is a tax charge that claws back Child Benefit from families where the highest earner has an income over £60,000.
Key Facts
- ✓ Applies when the highest earner makes over £60,000
- ✓ Charge is 1% of Child Benefit for every £100 over £60,000
- ✓ Fully repaid at £80,000+
- ✓ Paid through Self Assessment tax return
How It Works: A Real Example
Let's say you earn £70,000 and have 2 children. Here's what happens:
At £70,000, you repay 100% of the benefit, so you receive nothing net. At £80,000+, you repay 100% and should consider opting out.
If you or your partner have an individual income over £60,000 and receive Child Benefit, you may have to pay a tax charge. This is known as the High Income Child Benefit Charge (HICBC).
Should You Claim Child Benefit?
✓ Always Claim - Even If You Earn £125,000+
You should always claim Child Benefit, even if you'll repay 100% through HICBC. The non-monetary benefits are worth tens of thousands of pounds in future State Pension.
The Recommended Strategy: Claim, But Opt Out of Payments
If your income is over £80,000 (or between £60k-£80k and you don't want the admin burden), you should claim Child Benefit but tick the box to opt out of receiving payments. This gives you all the benefits without the tax charge.
Why You Must Claim (Even Without Payments)
Protects Your State Pension (National Insurance Credits)
The claimant (usually the non-working or lower-earning parent) automatically receives National Insurance credits until the child turns 12. These credits fill gaps in your NI record and protect your State Pension entitlement - potentially worth tens of thousands of pounds over your retirement.
Secures Your Child's National Insurance Number
Your child will automatically be sent a National Insurance number shortly before they turn 16, preventing the need to apply separately later.
Keeps Your Options Open
If your income drops in the future (job loss, career break, etc.), you can easily start receiving payments again without needing to make a new claim.
Real-World Example: £125,000 Earner
Scenario: One parent earns £125,000, the other is not working and caring for 2 children.
✓ Recommended Action: Claim Child Benefit and tick the box to opt out of receiving payments. The non-working parent gets NI credits protecting their State Pension, and there's no tax charge because no payments are received.
⚠️ Warning: Don't Fail to Claim
If the non-earning parent fails to claim Child Benefit, they risk having gaps in their National Insurance record, which could reduce their State Pension entitlement by tens of thousands of pounds over their retirement. The administrative act of claiming protects their future pension, regardless of the high income of the other parent.
How to Reduce the HICBC Charge
If you're in the £60k-£80k zone, these strategies can reduce or eliminate the charge:
If you choose to pay the charge, you must file a Self Assessment tax return each year, even if you are employed and pay tax through PAYE.
1Salary Sacrifice Pension Contributions
The most effective strategy. Pension contributions reduce your adjusted net income before HICBC is calculated.
Example:
Earning £65,000 with 2 children? Contribute £5,000 to your pension via salary sacrifice. Your adjusted income drops to £60,000, saving you £1,106 in HICBC (50% of £2,212). Your pension costs you just £3,894 net!
2Gift Aid Donations
Charitable donations through Gift Aid reduce your adjusted net income.
Example:
Donate £4,000 to charity. The grossed-up amount (£5,000) reduces your adjusted income, potentially saving you HICBC.
3Opt Out of Receiving Payments
If you'll repay 100% (income £80k+), claim the benefit but tick the box to opt out of receiving payments. You still get NI credits without the tax charge or Self Assessment burden.
Best for:
High earners (£80k+) who want to protect the non-working partner's State Pension without the admin hassle of paying back the benefit through tax returns.
Important: HICBC Applies to Highest Earner
The charge is based on the highest individual income in your household, not who claims the benefit. If your partner earns £70k and you earn £50k, the charge applies regardless of who claims. Either partner can claim, but the charge is calculated on the higher earner's income.
Calculate Your Full Tax Position
Use our comprehensive salary calculator to see your complete tax breakdown, including income tax, National Insurance, and HICBC.
Go to Full Calculator →Frequently Asked Questions
What if both parents earn over £60,000?
The charge applies to the highest earner only. If you earn £70k and your partner earns £65k, the charge is based on your £70k income.
Does HICBC apply to self-employed income?
Yes, HICBC is based on your total adjusted net income, including self-employed profits, dividends, rental income, and other taxable income.
What happens if I don't pay the charge?
HMRC will pursue you for the unpaid charge plus interest and potential penalties. You must declare it on your Self Assessment tax return.
Can I backdate my opt-out?
No, you can only opt out from the date you notify HMRC. Any Child Benefit already received while earning over £60k must be repaid via HICBC.