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Changes to the High Income Child Benefit Charge (HICBC)

Recent changes to the High Income Child Benefit Charge (HICBC) implemented on 6 April 2024, mean that more families can now retain their Child Benefit payments. However, some parents need to act swiftly to ensure they don’t miss out.

What Has Changed in the High Income Child Benefit Charge? 

Before 6 April 2024, Child Benefit payments began to be clawed back if one parent’s (or their partner’s) income exceeded £50,000. They had to repay 1% of the Child Benefit payments for every £100 their adjusted net income exceeded this threshold. All Child Benefit had to be repaid once the income reached £60,000.

From 6 April 2024, the starting threshold increased to £60,000, and the charge is now clawed back at a slower rate of 1% per £200, meaning parents do not repay all Child Benefit payments until an income reaches £80,000.

Who Is Now Eligible to Claim Child Benefit? 

Previously, many families stopped receiving payments or did not claim Child Benefit due to high-income levels under the old rules. These parents may now be eligible to keep some or all of the Child Benefit payments. However, HMRC will only backdate Child Benefit claims by up to three months. Parents have until 8 July 2024, to contact HMRC to ensure they do not lose out.

If parents have not previously claimed Child Benefit and submit a new claim between 6 April 2024, and 8 July 2024, HMRC will backdate the claim by up to three months into the 2023/24 tax year. A HICBC will only arise on these payments in the 2024/25 tax year if income exceeds £60,000. Note that this rule does not apply to parents restarting Child Benefit payments; a charge may still apply for 2023/24 if income exceeds £50,000 and the claim is backdated to before 6 April 2024.

Future Considerations

These new rules mean increased income for more families and fewer taxpayers needing to complete tax returns to report the HICBC. However, this may change, as mentioned in the recent budget, that they are considering reforming the HICBC to calculate it based on household income rather than just one parent or partner, effective from 6 April 2026. This reform could bring more families into the HICBC charge, though future election outcomes may influence further changes.

For details on how to claim or restart your Child Benefit payments, please visit the HMRC website.

If you would like to discuss ways to reduce your adjusted net income or any other tax issues related to the HICBC, self assessment and personal financial planning, please contact a member of the CB Reid team.