The High Income Child Benefit charge (HICBC) applies to a parent whose income exceeds £50,000 in a tax year and who is in receipt of Child Benefit. If both parents have an income that exceeds £50,000, the charge will apply to the highest income earner. The charge claws back the financial benefit of receiving Child Benefit either by reducing or removing the benefit entirely.
If you or your partner have exceeded the £50,000 threshold during the last tax year (2018-19) then you must take action. If you or your partner continue to receive Child Benefit (and earn over the relevant limits) you must pay any additional tax owed (the HICBC), for 2018-19, on or before 31 January 2020. If you have exceeded the limit for the first time and do not currently submit a tax return you will be required to do so.
The HICBC is levied at the rate of 1% of the full Child Benefit award for each £100 of income between £50,000 and £60,000. If your income exceeds £60,000, the amount of the charge will equal the amount of Child Benefit received.
HMRC’s guidance on Child Benefit stresses that if the HICBC applies to you or your partner, it is still worthwhile to claim Child Benefit for your child. This can help to protect your State Pension and will make sure your child receives a National Insurance number. However, you can still choose to keep receiving Child Benefit and pay the tax charge through self-assessment or elect to stop receiving Child Benefit and not pay the charge.