The High Income Child Benefit Charge

If you have an individual income over £50,000 and either you or your partner receive Child Benefit or someone else gets Child Benefit for a child living with you and they contribute at least an equal amount towards the child’s upkeep, you will be liable for the High Income Child Benefit Charge.

Who does the High Income Child Benefit Charge apply to?

The Charge is a tax that applies to an individual with income over £50,000 where either they or their partner received child benefit in the tax year or someone else received the benefit for a child living with them and they contributed at least an equal amount towards the child’s upkeep. Where both partners together have income greater than £50,000, the charge is levied on the higher earner. If their income is the same, the person who receives the child benefit pays the charge. ‘Partner’ does not have to be a spouse or civil partner – the charge also applies to unmarried couples living together as spouses or civil partners.

How much do I have to pay?

The charge recovers 1% of child benefit for every £100 by which the 'adjusted net income' exceeds £50,000. Where adjusted net income is £60,000 or more, the charge is 100% of the child benefit received in the tax year. 'Adjusted net income' for these purposes is income after taking account of any Gift Aid donations and pension contributions and, for the self-employed, trading losses.

If your income is higher than the threshold, you can either claim the benefit and pay the tax charge by 31 January, having completed the relevant section of the tax return, or not claim the benefit.

Not sure whether to claim?

Where the charge is equal to the full amount of the child benefit, it may seem easier not to claim it, rather than claiming only to have to pay it back. However, child benefit paid for a child under 12 comes with National Insurance credits, helping to build up entitlement to the state pension. Therefore, if you do not otherwise pay sufficient NIC credits for the year to be a qualifying year, failing to claim may adversely affect your state pension.

Further information

The government’s guidance ‘High Income Child Benefit Tax Charge’ offers more details about this tax.

About the Author

Martin Johnson

Partner

With expertise in advising family-owned companies on a range of tax, accountancy and business issues, Martin also has an in-depth knowledge of the automotive and property sectors. In addition, he provides advice on inheritance tax planning and financial management to owner-managed businesses.  Martin leads the firm in developing its expertise in the buy-to-let sector, advising both residential and commercial property owners on relevant tax and legislation issues. A further element to Martin’s role is to build Torgersens’ relationships with banks, financial advisors and specialists in commercial and employment law to ensure that the firm’s clients have access to market-leading guidance.  

To get in touch please e-mail martin.johnson@torgersens.com.