Many parents who fell within the ambit of the High Income Child Benefit Charge (HICBC) opted not to receive child benefit, rather than to receive it and pay it back in full in the form of the charge. However, changes to the HICBC which came into effect from April this year mean that some parents who previously lost all their child benefits to the charge will now be able to retain some or all of it. Where this is the case, they will need to restart their child benefit payments so that they do not lose out.
Changes to the HICBC
Prior to 6 April 2024, the HICBC applied where a child benefit claimant and/or their partner had an adjusted net income of more than £50,000 a year. The charge was equal to one per cent of the child benefit for the year for every £100 by which adjusted net income exceeds £50,000. Once adjusted net income reached £60,000, the charge was equal to the child benefit for the year.
From 6 April 2024, the HICBC applies where the claimant and/or their partner have an adjusted net income of more than £60,000 a year. The charge is equal to one per cent of the child benefit for the year for every £200 by which adjusted net income exceeds £60,000. Once adjusted net income exceeds £80,000, the charge is equal to the child benefit for the year.
Where both the claimant and their partner have adjusted net income above the trigger threshold, the charge is levied on the person with the higher adjusted net income.
You might also like to read: Reform of the High-Income Child Benefit Charge
Impact on child benefit
It is always important to claim child benefits to preserve the associated National Insurance credits, particularly where the claimant will not pay sufficient National Insurance contributions for the year to be a qualifying year.
However, where the charge is equal to the child benefit for the year, it may be preferable to opt not to receive the child benefit than to receive it only to repay it in the form of the HICBC.
For 2023/24 and previously, where the person liable for the charge had an adjusted net income of £60,000 or above, the charge equalled the child benefit for the year. Consequently, a decision may have been made not to receive the benefit. However, as a result of the changes to the HICBC thresholds from April 2024, the charge will only be equal to the child benefit for the year once the adjusted net income reaches £80,000.
As a result, where adjusted net income is £60,000, the HICBC would be 100% of the child benefit in 2023/24, but in 2024/25, there would be nothing to pay. Similarly, where adjusted net income is between £60,000 and £80,000, the charge would be equal to 100% of the child benefit in 2023/24 but less than 100% of the child benefit in 2024/25.
Claimants who had opted not to receive child benefit and either they or their higher earning partner have adjusted net income of at least £60,000 but less than £80,000 will now be able to retain some or all of their child benefit. Consequently, they should restart their payments so that they do not lose out. It is important to do this without delay as it can take up to 28 days before you will receive your first payment. The Child Benefit Office will let a claimant know in writing whether they will receive backdated payments and, if so, how much.
Payments can be restarted by using the online service or by completing the online form. Alternatively, HMRC can be contacted by phone on 0300 200 3100 or by post by writing to them at the following address:
HM Revenue and Customs – Child Benefit Office
PO Box 1
Newcastle upon Tyne
NE88 1AA.
Partner note:
