The High Income Child Benefit Charge (HICBC) is one of the most misunderstood taxes in the UK system. It’s the charge that claws back Child Benefit from higher earners — and it’s also the reason many people find themselves registering for Self Assessment for the first time, often with no idea why.
The rules changed significantly in April 2024, and again in October 2025 with a new way to pay that doesn’t require a tax return. Here’s the plain-English explanation.
What Is the High Income Child Benefit Charge?
The HICBC is a tax charge that applies when someone in a household receives Child Benefit and the higher-earning partner’s adjusted net income exceeds £60,000, as explained on HMRC’s HICBC page. The charge claws back some or all of the Child Benefit received, on a sliding scale.
It was introduced in 2013 by George Osborne as a way to means-test Child Benefit through the tax system rather than through the benefits system. The policy has been heavily criticised because it’s based on individual income, not household income — meaning a single earner on £70,000 loses some or all of their Child Benefit, while a couple each earning £59,000 (£118,000 combined) keep it in full.
The Current Thresholds (From 6 April 2024)
The thresholds were increased in the 2024 Spring Budget and remain in place for 2025/26 and 2026/27:
| Higher earner’s adjusted net income | HICBC charge |
|---|---|
| £60,000 or below | No charge — keep all Child Benefit |
| £60,001 – £80,000 | Taper: 1% of Child Benefit repaid for every £200 of income above £60,000 |
| £80,000 or above | Full charge — all Child Benefit repaid |
Under the old rules (before April 2024), the threshold was £50,000 and the taper ended at £60,000. The changes mean an estimated 150,000+ families who previously lost some or all of their Child Benefit can now keep it.
How the taper works in practice
For every £200 of adjusted net income above £60,000, you repay 1% of your total Child Benefit entitlement for the year.
For example, if you receive Child Benefit for two children (approximately £1,331/year in 2025/26) and your adjusted net income is £70,000:
- Income above £60,000: £10,000
- Number of £200 blocks: 50
- Charge: 50% of £1,331 = £665.50
At £80,000, the charge is 100% — you repay all Child Benefit received.
What Counts as Adjusted Net Income?
Adjusted net income is the figure that determines whether you owe the HICBC. It’s calculated as:
Total taxable income (PAYE salary, self-employment profits, rental income, dividends, savings interest, pension income, etc.)
Minus:
- Personal pension contributions (relieved at source)
- Gift Aid charity donations
- Self-employed trading losses (if applicable)
This is the same “adjusted net income” figure used for other tax calculations, including the Personal Allowance taper (where income over £100,000 reduces your tax-free allowance).
The pension trick
Because pension contributions reduce your adjusted net income, increasing your pension contributions can reduce or eliminate the HICBC. This isn’t a loophole — it’s how the legislation works, and it’s the single most effective way to reduce the charge for people in the £60,000–£80,000 range.
For example, if your adjusted net income is £65,000 and you make £5,000 in personal pension contributions, your adjusted net income drops to £60,000 — and the HICBC disappears entirely. You keep all your Child Benefit and you get tax relief on the pension contribution. For the full mechanics of how pension contributions reduce your adjusted net income — the annual allowance, carry forward, and how to claim higher-rate relief — see our pension contributions and Self Assessment guide.
Who Pays the Charge?
The charge is paid by the higher earner in the household — the partner with the higher adjusted net income. This applies whether you’re married, in a civil partnership, or cohabiting. The only requirement is that you’re not permanently separated.
If both partners have adjusted net income over £60,000, the charge falls on the higher earner. If only one partner exceeds £60,000, that partner pays — even if they’re not the one receiving the Child Benefit.
The “partner’s children” trap
You can be caught by the HICBC even if the Child Benefit is being claimed for your partner’s children from a previous relationship. If you live together as a household and your income exceeds £60,000, you’re liable — regardless of whether the children are biologically yours.
The Household Income Reform: Not Happening
The previous Conservative government announced in the March 2024 Budget that the HICBC would move to a household income basis from April 2026, which would have addressed the unfairness of the individual-income test.
This reform has been scrapped. In the October 2024 Budget, Chancellor Rachel Reeves confirmed the Labour government would not proceed with the household income reform, citing a “significant fiscal cost of £1.4 billion by 2029/30.” According to iNews’s reporting, the Treasury concluded it would be too expensive and too administratively complex for HMRC to assess couples on their combined income.
The current individual-income basis is confirmed for 2026/27 and beyond. There is no current proposal to change this.
How to Pay the HICBC
Option 1: Through your PAYE tax code (new from October 2025)
This is the biggest change since the threshold increase. From October 2025, HMRC has launched a new digital service that allows you to pay the HICBC through your PAYE tax code — without filing a Self Assessment tax return.
According to LITRG’s guidance on the new service and ICAEW’s analysis:
Who can use it:
- You’re a PAYE employee (or receive a pension taxed via PAYE)
- HICBC is your only reason for being in Self Assessment
- You have no other income that requires Self Assessment (no self-employment, no property income, no capital gains above the annual exemption, etc.)
How to set it up:
- Deregister from Self Assessment if you’re currently registered (HMRC won’t do this automatically) — call HMRC or use your online account
- Wait 24-48 hours for the deregistration to process
- Register for the HICBC PAYE service on GOV.UK or through the HMRC app
- You’ll need your partner’s National Insurance number (if they receive the Child Benefit) and details of any relationship changes during the tax year
- Your PAYE tax code will be adjusted to collect the charge through your salary or pension
Deadline: You must register by 31 January after the end of the tax year (the same as the Self Assessment filing deadline). For the 2024/25 tax year, the deadline is 31 January 2026.
If you haven’t filed your 2024/25 return yet: You can opt to pay both your 2024/25 and 2025/26 HICBC through your 2025/26 PAYE code. From 2026/27 onwards, the charge should be collected in the year it arises.
Option 2: Through Self Assessment (still required for some)
If you file a Self Assessment return for any other reason — self-employment, property income, capital gains, income above £100,000, foreign income, etc. — you must continue to declare and pay the HICBC through your Self Assessment return. You cannot use the PAYE-only service.
This is the situation for many sole traders and landlords: even if the HICBC is a minor part of your tax affairs, the fact that you’re already in Self Assessment for other reasons means you declare it on your return.
Option 3: Opt out of receiving Child Benefit
You can simply opt out of receiving Child Benefit payments. If you do this, there’s no charge to pay and no Self Assessment requirement. However, you may still want to register for Child Benefit (and then opt out of payments) to protect your National Insurance credits — these credits count towards your State Pension entitlement if you’re not working or earning enough to pay NI.
If You Opted Out Under the Old Rules
If you opted out of Child Benefit because your income was between £50,000 and £60,000 under the old rules, you should consider re-registering. Under the current rules:
- If your income is now below £60,000: you can receive Child Benefit with no charge
- If your income is between £60,000 and £80,000: you’ll face a partial charge, but you’ll still keep some of the benefit
- If your income is above £80,000: the full charge still applies, so opting out may still make sense
You can also backdate Child Benefit claims for years you were eligible but didn’t claim. Contact HMRC’s Child Benefit Office to discuss your situation.
HMRC’s Letter Campaign (September–November 2025)
According to CIOT’s report on HMRC’s letter campaign, HMRC began writing to approximately 100,000 PAYE taxpayers in September 2025 whose income is over £60,000 and who may be liable for the HICBC for 2024/25 and/or 2025/26.
The letter includes a flowchart to help you work out if you need to pay the charge, and explains the new PAYE service. If you receive one of these letters, don’t ignore it — it means HMRC’s records show you may owe the charge, and you need to take action by 31 January.
The Penalty Issue
The HICBC has historically been a major source of penalties — people simply didn’t know they owed it, and HMRC’s “tell us yourself” approach was widely seen as unfair. According to IFA Magazine, HICBC penalties collapsed by 99% after HMRC changed its approach to stop charging penalties for people who genuinely didn’t know about the charge.
However, now that HMRC is proactively writing to people who appear to be liable, the “I didn’t know” defence is weaker. If you receive a letter and don’t act, you may face penalties for non-disclosure. See our guide on how to appeal an HMRC penalty if you’ve already been charged.
The Bottom Line
- The HICBC starts at £60,000 (adjusted net income of the higher earner) and tapers to £80,000. Above £80,000, all Child Benefit is repaid.
- It’s based on individual income, not household income — and Labour has scrapped plans to change this.
- From October 2025, you can pay via PAYE without filing a Self Assessment return — but only if HICBC is your sole reason for being in Self Assessment.
- If you’re already in Self Assessment (sole trader, landlord, etc.), you declare the HICBC on your tax return as normal.
- Pension contributions reduce your adjusted net income — increasing contributions can reduce or eliminate the charge.
- If you opted out under the old £50,000 rules, consider re-registering if your income is now below £80,000.
- If HMRC writes to you, don’t ignore the letter — you need to act by 31 January.
For more plain-English explanations of HMRC terms, see our full jargon buster. If you’re registering for Self Assessment for the first time because of the HICBC, see our first-year self-employed checklist for the registration process. For how the charge interacts with the Marriage Allowance and the Personal Allowance taper, see those guides.