HM Revenue & Customs (HMRC)\u00a0has launched a new system to calculate and collect the High Income Child Benefit Charge (HICBC).\u00a0 The update affects families where one or both parents earn between \u00a360,000 and \u00a380,000 a year each and claim child benefit payments.\u00a0 For every extra \u00a3100 a parent earns above \u00a360,000, they lose 1% of the payments they\u2019re entitled to per child.<\/p>\n
At \u00a380,000 of earnings, the full benefit is effectively clawed back completely through the tax system.\u00a0 Currently, this has to be assessed by filling out a Self-Assessment tax return, forcing many parents who don\u2019t otherwise need to do the paperwork to file each year.<\/p>\n
The new system will directly tax away the child benefit payments entitlement using the earner\u2019s tax code, removing the need for a Self-Assessment.\u00a0 The aim of this is to simplify how the charge is paid and reduce the number of people who need to complete a Self-Assessment tax return.<\/p>\n
What has changed<\/strong><\/p>\n Previously, anyone who earned more than \u00a360,000 a year and either claimed child benefit or lived with a partner who did,\u00a0was required\u00a0to pay back some or all of the benefit through the HICBC.<\/p>\n Most affected taxpayers had to register for Self-Assessment and file an annual return, even if this was their only reason for doing so.\u00a0 Under the new system \u2013 which is now in effect for the 2024\u201325 tax year (which ended<\/strong>\u00a0on 5 April 2025) \u2013 HMRC will use real-time pay and tax information it already collects from employers to adjust tax codes directly.<\/p>\n For many people, this means the charge can be collected automatically through their PAYE tax code, removing the need to complete a Self-Assessment return.<\/p>\n Signing up to the new system<\/strong><\/p>\n Those who may be affected need to register themselves with the new system in order to avoid having to fill out a Self-Assessment return.\u00a0 This can be done on GOV.UK<\/a>.<\/p>\n You can sign up to this system if you have no other reason for sending a tax return and you are paid through the PAYE system for workers.<\/p>\n