Register for Child Benefit even if the HICBC applies
If you are responsible for bringing up a child who is under the age of 16, or under the age of 20 where they remain in approved education or training (such as A levels but not education at an advanced level, such as university), you can claim child benefit. Only one person can receive child benefit in respect of a particular child.
For 2021/22, child benefit is payable at the rate of £21.15 for the eldest or only child, and at the rate of £14 per week for any additional children. It is paid every four weeks.
The High Income Child Benefit Charge (HICBC) applies to claw back child benefit paid where the recipient, or their partner if they have one, has ‘adjusted net income’ of £50,000 or more. This is income before personal allowances and deductions for items such as Gift Aid.
The HICBC works by clawing back 1% of the child benefit paid for every £100 by which adjusted net income exceeds £50,000. Where adjusted net income exceeds £60,000, the HICBC is equal to 100% of the child benefit paid in the tax year.
Who pays the tax?
Where both the claimant and the claimant’s partner have adjusted net income in excess of £50,000, the HICBC is payable by the person who has the highest adjusted net income. If only one of them has adjusted net income in excess of £50,000, then that person is responsible for paying the tax. This means that the person on whom liability for the HICBC falls is not necessarily the same person who has received the child benefit.
For the purposes of the charge, a person is a partner of the claimant if they are married to the claimant or in a civil partnership with the claimant and not permanently separated, or someone who lives with the claimant as if they were married or in a civil partnership. The charge will apply regardless of whether the claimant’s partner is biologically related to the child in respect of whom the child benefit is paid, or is responsible for that child.
Elect not to receive child benefit
To eliminate the need to repay child benefit received in the form of the HICBC, where the charge is equal to 100% of the child benefit, it may be easier to elect for this not to be paid. Where child benefit is already being paid, the claimant can opt out of payments by completing the online form or contacting HMRC by post or by phone.
Register to benefit from National Insurance credits
Where HICBC applies but the claimant would not otherwise pay sufficient National Insurance contributions for the year to be a qualifying year for state benefit purposes (for example, where the claimant does not work or has low earnings and the HICBC is payable by the claimant’s partner), it is important for the claimant to register for child benefit in order to receive National Insurance credits to preserve their state pension entitlement. These are available where a person is registered for child benefit in respect of a child under 12.
At the time of registering, the claimant can elect for the child benefit not to be paid, where this is preferable to receiving it and paying the same amount in the form of the HICBC.
Partner note: ITEPA 2003, Pt. 10, Ch. 7 (ss. 681B – 681H); SSAA 1992, s. 13A.