Even if you earn over £60,000, don’t ignore Child Benefit. Here’s why you should still claim and how the tax charge works.
How the High Income Child Benefit Charge Works
The Basics
| Income of Higher Earner | HICBC Effect |
|---|---|
| Under £50,000 | Full Child Benefit, no charge |
| £50,000–£60,000 | Partial charge — lose 1% for every £200 above £50,000 |
| Over £60,000 | Full charge — pay back 100% of Child Benefit |
Key Points
- It’s based on the higher earner’s individual income, not household income
- Two parents earning £49,000 each (£98,000 total) pay no HICBC
- One parent earning £60,000 and one earning £0 pay full HICBC
- It applies to your adjusted net income (not gross salary)
Child Benefit Rates (2024/25)
| Children | Weekly Amount | Annual Amount |
|---|---|---|
| 1 child | £26.05 | £1,354.60 |
| 2 children | £43.30 | £2,252.60 |
| 3 children | £60.55 | £3,150.60 |
| 4 children | £77.80 | £4,048.60 |
Calculating the Charge
Between £50,000 and £60,000
The charge is 1% of Child Benefit for every £200 of income above £50,000.
Example — One child, income £55,000:
- Income above £50,000: £5,000
- Number of £200 bands: 25
- Charge: 25% of £1,354.60 = £338.65/year
- Net benefit received: £1,354.60 — £338.65 = £1,015.95/year
At £60,000+
You repay 100% of the Child Benefit:
| Children | Annual Benefit | HICBC (100%) | Net Benefit |
|---|---|---|---|
| 1 | £1,354.60 | £1,354.60 | £0 |
| 2 | £2,252.60 | £2,252.60 | £0 |
| 3 | £3,150.60 | £3,150.60 | £0 |
At this point, receiving payments seems pointless — but there are still strong reasons to register your claim.
Why You Should Always Claim (Even Over £60k)
1. National Insurance Credits for the Non-Working Parent
If one parent earns over £60k and the other is not working (or earning under the NI threshold):
- The non-working parent receives Class 3 NI credits through the Child Benefit claim
- These count towards their State Pension (you need 35 qualifying years for the full amount)
- Each missing year could cost £300+/year in State Pension for the rest of their life
- Over a 20-year retirement, one missing NI year = £6,000+ in lost pension
This alone makes it worth claiming even if you pay back 100% of the benefit.
2. Child’s National Insurance Number
When your child turns 16, they’re automatically issued a National Insurance number if you’ve claimed Child Benefit. Without a claim, they need to apply separately.
3. You Can Opt Out of Payments
You can register a Child Benefit claim but opt out of receiving payments. This means:
- No money comes in, so no HICBC to pay
- You don’t need to file a Self Assessment return just for HICBC
- The NI credits and NI number benefits still apply
This is the simplest option if you earn well over £60,000.
How to Reduce Your Adjusted Net Income
The HICBC uses adjusted net income, not gross salary. You can reduce this through:
Pension Contributions
| Strategy | Effect |
|---|---|
| Salary sacrifice | Reduces gross pay directly — most effective |
| Personal pension | Gross contribution deducted from adjusted net income |
| Employer contributions | Not counted as your income |
Example: Salary £62,000. You contribute £3,000 via salary sacrifice. Adjusted net income = £59,000. HICBC drops from 100% to 45%.
Gift Aid Donations
Charity donations through Gift Aid are grossed up and deducted from adjusted net income.
Example: £1,000 Gift Aid donation = £1,250 gross, deducted from your income.
Trading Losses
If you have self-employment losses, these reduce your adjusted net income.
Practical Strategy
If your income is close to £50,000 or £60,000, pension contributions are the most effective tool. Putting extra into your pension:
- Reduces your HICBC charge
- Gets you tax relief on the contribution
- Builds your retirement fund
| Income | Pension Increase Needed | HICBC Saving (2 children) | Tax Relief on Contribution |
|---|---|---|---|
| £55,000 | £5,000 to reach £50k | £562.65 | £2,000 (40%) |
| £62,000 | £2,000 to reach £60k | £225.26 per £2k band | £800 (40%) |
Self Assessment Requirements
If you or your partner receives Child Benefit payments and either of you earns over £50,000:
- The higher earner must register for Self Assessment
- File a tax return by 31 January following the end of the tax year
- Pay the HICBC through your tax return
If you opt out of receiving payments, you don’t need to file a return just for this reason.
Common Mistakes
Not Claiming at All
The biggest mistake. Even at very high incomes, the NI credits for the non-working parent are extremely valuable. Always register the claim.
Not Knowing Your Partner Earns Over £50k
The charge applies to the highest earner in the household. If your new partner moves in and earns over £50k, the HICBC may now apply.
Forgetting to File Self Assessment
HMRC can charge penalties for late Self Assessment returns:
- 1 day late: £100 penalty
- 3 months late: £10/day (up to £900)
- 6 months late: 5% of tax owed or £300 (whichever is greater)
- 12 months late: Further 5% or £300
Not Considering Salary Sacrifice
Many people pay the full HICBC when a small pension contribution increase would eliminate or reduce it — saving money twice over.