High Income Child Benefit Charge explained

Child Benefit is paid to anyone responsible for a child, regardless of income. But if you or your partner earn above a certain level, some or all of it is taken back through a tax charge: the High Income Child Benefit Charge. This guide explains when it applies, how it’s worked out, and the options for reducing it.

When the charge applies

You may have to pay the charge if:

• you or your partner receive Child Benefit, or someone else gets it for a child who lives with you and you contribute at least as much to their upkeep; and
• your adjusted net income is over £60,000 in the tax year.

“Partner” means someone you’re married to, in a civil partnership with, or living with as a couple. The charge looks at each partner’s income separately, not your combined household income. If both of you are over the threshold, the partner with the higher adjusted net income pays it. GOV.UK’s High Income Child Benefit Charge guide sets out the rules.

What counts as income

Adjusted net income is your total taxable income for the year, including:

• salary, bonuses, overtime and taxable benefits such as a company car;
• profits from self-employment;
• savings interest, dividends and rental profits;
• taxable pensions.

It’s reduced by some deductions, including pension contributions that get tax relief and Gift Aid donations. Salary sacrifice reduces it automatically, because the sacrificed amount is never part of your taxable pay.

How the charge is calculated

The charge is a percentage of the Child Benefit you received in the tax year. It increases with your income:

• below £60,000: no charge;
• between £60,000 and £80,000: 1 per cent of your Child Benefit for every £200 of income above the threshold;
• at £80,000 or more: a charge equal to all of your Child Benefit.

For example, with adjusted net income of £65,000, the charge is 25% of your Child Benefit. At £70,000 it’s 50%. Because the charge only takes back what you received, you’re never worse off overall by claiming Child Benefit, although the effective tax rate on income in the band can be high.

Child Benefit rates are set each April, and the charge for each year uses the amount you actually received in that year, so it covers any weeks before a new claim started or after it stopped. You can check the current weekly rates on GOV.UK’s Child Benefit page.

The effective tax rate in the band

On income between the threshold and the full-charge level, you pay income tax and NI as normal, and you also lose part of your Child Benefit. For a family with more than one child, the extra loss can push the effective rate on that slice of income well above the higher rate. The more children you claim for, the higher the effective rate in the band.

Reducing the charge with pension contributions

Because the charge is based on adjusted net income, paying more into your pension can reduce or remove it.

• Salary sacrifice reduces your taxable pay directly, and saves National Insurance too. Our guide to salary sacrifice explains how it works.
• Relief at source contributions, for example to a personal pension, reduce adjusted net income by the gross amount, including the basic-rate relief your provider adds.
• Net pay contributions come out before tax, so your taxable pay is already lower.

For example, someone with adjusted net income of £70,000 would need to reduce it by £10,000 through pension contributions to avoid the charge completely. At that level, each pound of contribution also gets higher-rate tax relief, so the combined saving can be substantial. The salary sacrifice calculator shows the take-home cost, and our guide to pension tax relief explains the different schemes.

A bonus can push you into the band for a single year. The bonus tax calculator helps you see whether sacrificing part of it into your pension would keep you below the threshold.

Paying the charge

If you owe the charge, you can pay it through your tax code, so it’s collected through PAYE from your salary over the year, or through Self Assessment. If you need to file a Self Assessment return for another reason, you must pay the charge that way.

If you don’t want to pay the charge, you can opt out of receiving Child Benefit payments while staying registered. You don’t pay the charge, and you still get National Insurance credits and your child still gets a National Insurance number automatically.

Why you should still claim

Even if your income is well above the full-charge level, it’s usually worth registering for Child Benefit and opting out of payments, rather than not claiming at all. Registering:

• gives National Insurance credits to a parent who isn’t working or earns below the lower earnings limit, which protects their State Pension record;
• means your child gets a National Insurance number automatically before they turn 16.

Keeping track of your income

Because the charge depends on your income for the whole tax year, a pay rise, bonus or extra savings interest can change it. Check your expected adjusted net income before the end of the tax year on 5 April, while there’s still time to make pension contributions. The pay rise calculator shows how much of a rise you’d keep before taking the charge into account. If you’re also above £100,000, see our guide to the Personal Allowance taper trap, which uses the same measure of income. Couples where one partner earns less than the Personal Allowance may also benefit from Marriage Allowance.