In this guide
Child benefit can offer parents and guardians extra financial support to help look after their little ones – as well as giving access to national insurance credits. But earn above a certain amount and you might fall foul of the high-income penalty charge. We explain what it is and what is changing.
In his 2024 spring budget, chancellor Jeremy Hunt moved to address one of the glaring problems with the child benefit system. It is currently based on the income of the highest earner in the household meaning single parent or sole/main breadwinner families are penalised.
New interim rules were introduced on April 6, which the government said will boost the coffers of nearly half a million families by around £1,260 a year – or up to £2,212 a year if you have two children.
In this guide, we look at:
- What is the high-income child benefit charge?
- What child benefit changes were introduced in the 2024 spring budget?
- How can I avoid the high-income child benefit charge?
- What are the penalties for not paying the charge?
- Should you claim for child benefit if you earn over the threshold?
Read more: ‘I earn more than £60k a year – can I avoid the child benefit charge?’
What is child benefit?
Child benefit is money paid by the government to anyone responsible for bringing up a child. Only one parent or guardian can claim it on behalf of a child but the number of kids you can claim for is unlimited.
For the current 2024/25 tax year, you will receive:
- £25.60 a week for the eldest or only child
- And £16.95 a week for any other children
Child benefit is paid every four weeks, straight into your bank account.
Children are eligible if they are:
- Under the age of 16
- Or under the age of 20 if they are still in certain types of education or training.
Find out more about child benefit, how it works and how to claim
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What is the high-income child benefit charge?
Currently, if you and your partner each earn less than £60,000 a year, you can claim for the full amount of child benefit. This changed on April 6 from £50,000.
But if either of you earns more than this, you will have to pay some or all of the benefit back to the government in the form of the high-income child benefit charge (HICBC):
- You pay back 1% of your child benefit for every £200 earned over £60,000
- So at £70,000 you will need to pay back 50% of the payments
- Once you or your partner’s income hits £80,000, the charge wipes out all the child benefit
- The charge is paid through your self-assessment form
- You can choose to claim the benefit and repay it via the charge, or register for it, but not claim it
For example, in the 2023/24 tax year:
| Family 1 | Family 2 | |
|---|---|---|
| Earnings split between parents | Parent A earns £80,000 Parent B doesn’t work or Parent A is a single parent | Parents C and D each earn £59,999 |
| Annual household income | £80,000 | £119,998 |
| Entitled to child benefit? | Not entitled to any child benefit | Entitled to full child benefit |
Critics say the income criteria is unfair because a household with a total income of almost £120,000 could get full child benefit, while a household earning £40,000 less gets nothing.
Does rental income count?
Yes, the earnings threshold includes all income that you receive.
If, for example, you have a salary of £50,000, but also a bonus at work, rental income or interest on your savings, it could push you above £60,000.
The threshold at which you start paying the higher rate of tax is £50,271.
The previous child benefit high income threshold, which started at £50,000, meant that even basic-rate taxpayers could be paying the charge, despite it being introduced to target high earners. That situation has now changed.
Read: Thousands to get state pension boost due to child benefit loophole
High-income child benefit charge calculator
To work out how much tax you might have to pay on child benefit as a higher earner, use this government calculator.
What child benefit changes were introduced in the 2024 spring budget?
In his spring budget, chancellor Jeremy Hunt acted to update the rules for the high income child benefit charge. By April 2026, the aim is to assess the charge on a household rather than single income basis.
In the meantime, the threshold to start paying back child benefit increased from the start of the new tax year on April 6, 2024, from £50,000 to £60,000. The government says that this will take an estimated 170,000 families out of paying the charge this year.
The upper limit shifted from £60,000 to £80,000, providing an estimated £1,260 boost on average for around half a million working families.
Who should claim?
If you are a stay-at-home mum or dad and not working, you won’t be earning in order to make national insurance contributions. If you have gaps in your national insurance record then you could miss out on some state pension money later on in life.
Parents earning less than £12,570 a year should make the claim for child benefit in their name because this is the threshold below which you do not make national insurance contributions.
If you or your partner’s income is above the £60,000 threshold for the full amount of child benefit, you can choose to:
- Receive the benefit and repay any charge at the end of each year through your self-assessment tax return, or
- Sign up for child benefit but opt out of receiving it, and not pay the tax charge.
If you (or your partner) earn above £80,000, your options are:
- Receive the benefit and repay it in full at the end of each year through your self-assessment tax return
- If one of you earns above £80,000 and the other earns too little to pay national insurance, you can formally opt out. But make sure this is registered with HMRC, otherwise it could cost the lower earner their national insurance credits
How do I pay the child benefit tax charge?
If your or your partner’s income is over the threshold for the HICBC, you can choose to receive child benefit payments and then pay back any tax due at the end of each tax year.
You do this by submitting a self-assessment tax return.
You will need to do this even if you are employed and earning through PAYE. Read our guide to filling in a self-assessment tax return.
Looking for ways to boost your household savings? Check our video guide to reviewing your family finances.
How can I avoid the high-income child benefit charge?
Higher earners risk being caught in a “child benefit trap” if they are earning more than they thought or are unaware of the threshold.
You may find that even if your salary is less than £60,000, you actually earn more than that in a year when you add in work benefits such as private medical insurance or a bonus from your employer.
But there are ways to beat the £60,000 child benefit trap.
You can reduce your taxable income to keep yourself under the threshold by:
- Paying more in pension contributions
- Making cash gifts to charity under Gift Aid before the end of the tax year
- Leasing a car through your company’s salary sacrifice scheme, if this is offered
Can I use pension contributions to avoid the charge?
If pension contributions made through a PAYE scheme bring you under the threshold you will not need to fill in a tax return.
However, if you make personal pension contributions and charity donations that reduce your income below £60,000 you need to complete a tax return. HMRC won’t know about these and base its calculations on the higher figure filed by your employer.
The government’s benefits calculator can help you with this.
Find out how our reader Duc Hoang pays more into his pension in the months before the end of the tax year to bring his salary below the threshold.
Read more: Cost of living crisis has put our plans to have children on hold
What are the penalties for not paying the charge?
It is your responsibility to inform HMRC if your circumstances change and you become liable for the HICBC. Examples include that you:
- Have had a pay rise
- Got a work bonus
- Started a new job
- Have a new live-in partner
If you fail to notify HMRC, or you send in a tax return that isn’t accurate, you could face a fine of 10%-30% of the tax owed plus interest, unless you have a reasonable excuse.
If you disagree with the amount of HICBC you have been charged, HMRC has an appeals and reviews process. This involves appointing a neutral specialist officer to help resolve a dispute. Or you can apply for your appeal to be heard by an independent tribunal.
Should you claim for child benefit if you earn over the threshold?
If you are wondering whether it’s worth claiming child benefit if one of you earns more than £60,000, the answer is: yes you should, even if you have to give all the money back.
It gives a low-earning or non-earning parent the opportunity to build up their national insurance contributions, which protects their eligibility for the full state pension.
That eligibility is threatened if you have given up work or taken time out to raise children, leaving you with gaps in your national insurance record.
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Need more help with the high-income child benefit charge?
Here are some government web pages where you can find more information:
- High-income child benefit charge
- Claim child benefit
- Child benefit tax calculator
- Self-assessment
- Making an appeal
Tax-free childcare UK: Are you eligible?
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