Understanding the High-Income Child Benefit Charge

Child Benefit and The High-Income Child Benefit Charge

Child Benefit is like a financial lifeline for parents or guardians, helping with the costs that come with raising a child. It is a real game-changer for lots of families.

High Income Child Benefit Charge (HICBC)

Many families are eligible to receive Child Benefit, even those on a higher income can claim it. However, there is a bit of a catch for those individuals who earn over £50,000 per year, they will have to pay some – or all – of it back. This is known as the High-Income Child Benefit Charge (HICBC). The charge starts when someone’s income goes over the limit. So if one person in the household earns more than £50,000 a year, they trigger the HICBC. And if your total yearly earnings exceed £60,000 or more, you might even find the entire child benefit could be subject to the charge.

How much will I have to pay back?

Here is how the High-Income Child Benefit Charge is calculated… For every £100 of income earnt over £50,000, you are subject to a 1% charge on your child benefit. It is the governments way of making sure the charge fits your income level. For example, if you earn £55,000 you will be charged 50% of your child benefit. Once your total income exceeds £60,000, you will be charged 100% of your entitlement so you will not be entitled to any of the benefit.

How do I pay it?

For those who are subject to the HICBC, you’ll need to complete a Self-Assessment Tax Return to declare your income and from this you can work out how much you owe.

Can I opt out?

If dealing with all these complications and potential charges isn’t your thing, there is an option to opt out of receiving Child Benefit. Families can choose to opt out of receiving the benefit altogether and keep things simple.

How can we help?

So, whether you’re crunching numbers for the HICBC or deciding whether or not to opt-out, knowing the ins and outs of Child Benefit – and any applicable charges – is key for keeping your finances in order.

If you need help with your Self-Assessment Tax Return, or you’re not sure whether this charge applies to you? Get in touch today. Our team of experts at A&M Accounting will be happy to help!