With a new online service launched by HMRC, taxpayers who need to pay the High Income Child Benefit Charge (HICBC) can do so in real time, instead of registering for self-assessment.
The HICBC applies if a parent/guardian (or their partner) has received Child Benefit while earning more than £60,000 a year. The charge removes 1% of the benefit for every £200 over this threshold, which means that the benefit is reduced to nil once their annual income reaches £80,000.
Read on to learn more about the online service and how to sign up to pay directly through PAYE.
How to pay the HICBC via PAYE
If an employee has no other reason to submit a self-assessment tax return, such as declaring property income, then they should be able to pay the HICBC through PAYE.
You can sign up to pay the Child Benefit tax charge through PAYE on the government website, but you’ll need to provide your National Insurance number, photo ID, and income details. Once you have registered successfully, HMRC should update your tax code within 48 hours.
The deadline to register for the online service is the 31st of January following the tax year the HICBC is payable for. Anyone who is already registered for self-assessment must deregister first.
If you haven’t yet submitted a return for the 2024–2025 tax year, you can choose to settle your HICBC liability through PAYE during the 2025–2026 tax year instead. However, if you’re also liable for the HICBC in 2025–2026, this means HMRC will recover both amounts in the same year.
After the current tax year ends, HMRC will only collect the HICBC via PAYE during the relevant tax year.
Get help managing your HICBC liability
Signing up to pay this tax charge directly as an employee should be straightforward. That said, some cases can be more complicated if relationships with partners change during the tax year.
For parents/guardians earning between £60,000–£80,000 a year, it may seem easier to simply opt out of receiving Child Benefit. It’s important to still claim, even while opting out of payments, to receive National Insurance credits that contribute to the individual’s State Pension.
If you aren’t sure what to do, it can be helpful to seek tax planning advice from professionals, like the team here at gbac. Our accountants in Barnsley can help you optimise your tax-free allowances.
For more information, please give us a call on 01226 298 298 or send an email to info@gbac.co.uk.