The High Income Child Benefit Charge confuses thousands of families. Here’s a clear guide to whether you should claim, opt out of payments, or do nothing.
For the wider cluster covering rates, NI credits, older children and special cases, use the main Child Benefit hub.
Child Benefit Rates 2025/26
| Children | Weekly amount | Annual amount |
|---|---|---|
| First child | £26.05 | £1,354 |
| Second child | £17.25 | £897 |
| Third child | £17.25 | £897 |
| Two children total | £43.30 | £2,251 |
| Three children total | £60.55 | £3,148 |
How the High Income Child Benefit Charge Works
The HICBC applies when the higher earner in a household has adjusted net income above £60,000.
| Income of higher earner | What you keep |
|---|---|
| Under £60,000 | 100% of Child Benefit |
| £60,000 – £80,000 | Gradually reduced (lose 1% per £200 over £60k) |
| £80,000+ | Effectively 0% — all clawed back |
Example — Two Children, £70,000 Income
| Calculation | Amount |
|---|---|
| Child Benefit received | £2,251/year |
| Income over £60,000 | £10,000 |
| HICBC rate | £10,000 ÷ £200 = 50% |
| Tax charge | 50% × £2,251 = £1,126 |
| Net benefit kept | £1,125 |
At £70,000, you’d still keep over £1,000 per year.
Three Options — Which Is Best?
Option 1: Claim and Receive Payments
Best if: Higher earner’s income is between £60,000 and £80,000
- You receive the full benefit payments
- Higher earner must register for self-assessment
- Pay the HICBC charge through your tax return
- You keep the difference
- Stay-at-home parent gets NI credits automatically
Option 2: Claim but Opt Out of Payments
Best if: Higher earner’s income is over £80,000
- You fill in the claim form but tick the box to not receive payments
- No money comes in, so no HICBC to pay
- No self-assessment needed (for this reason)
- Crucially, the non-working parent still gets NI credits
Option 3: Don’t Claim at All
Almost never the right choice.
- No payments received
- No HICBC to deal with
- No NI credits for the stay-at-home parent — this is the trap
Why NI Credits Matter So Much
If one parent stays home (or earns below the NI threshold), they need NI credits to build their state pension.
| Scenario | Annual state pension impact |
|---|---|
| Claim Child Benefit | Full NI credit — no pension gap |
| Opt out of payments (but claim) | Full NI credit — no pension gap |
| Don’t claim at all | Missing year — lose ~£356/year in retirement |
Over a career break of 10 years without claiming:
| Lost NI years | Pension reduction per year | Over 20 years retirement |
|---|---|---|
| 5 years | £1,780/year less | £35,600 lost |
| 10 years | £3,560/year less | £71,200 lost |
How to Reduce Your Income Below £60,000
Legitimate ways to reduce adjusted net income and avoid HICBC:
| Strategy | How it helps |
|---|---|
| Pension contributions | Salary sacrifice or personal contributions reduce adjusted net income |
| Gift Aid donations | Extends your basic rate band |
| Salary sacrifice schemes | Childcare vouchers, cycle to work, EVs |
| Trading losses | If you’re self-employed |
Example — Salary Sacrifice to Avoid HICBC
| Before | After salary sacrifice |
|---|---|
| Salary: £65,000 | Salary: £59,000 |
| Pension contribution: £0 extra | Extra £6,000 into pension |
| HICBC: 25% charge | HICBC: None |
| Child Benefit kept: ~£1,688 | Child Benefit kept: £2,251 (full) |
| Plus: £6,000 in pension with tax relief |
Decision Flowchart
- Do you have children under 16 (or under 20 in education)? → If yes, continue
- Does the higher earner make under £60,000? → Claim and receive — no charge
- Does the higher earner make £60,000–£80,000? → Claim and receive — keep the difference after HICBC
- Does the higher earner make over £80,000? → Claim but opt out of payments — protect NI credits
- Is one parent not working or earning below NI threshold? → Always claim to protect their state pension
Common Mistakes
- Not claiming at all — losing NI credits worth thousands in retirement
- Not registering for self-assessment — HMRC can charge penalties plus interest
- Assuming it’s based on household income — it’s based on the individual higher earner only
- Not using salary sacrifice — could reduce income below the threshold
- Forgetting to claim for a new baby — NI credits only start when you claim
Related Guides
- Child Benefit Guide — full eligibility and how to claim
- Salary Sacrifice Guide — reduce taxable income
- State Pension Guide — how NI credits build your pension
- Income Tax Bands UK — understanding tax thresholds