Employed taxpayers who are liable for the High Income Child Benefit Charge (HICBC) will no longer need to submit a self-assessment tax return from summer 2025 onwards.
HMRC is introducing a new online service for employed taxpayers to report the charge instead.
Here’s what parents claiming Child Benefit need to know about paying the HICBC this year.
When is the HICBC payable?
For the 2025–2026 tax year, Child Benefit will be paid every 4 weeks at a rate of £26.05 a week for the first child and £17.25 a week for each additional child.
The High Income Child Benefit Charge will only apply if an individual receiving the benefit – or their partner – earns an annual income of more than £60,000.
For every £200 earned above this threshold, 1% of the benefit is removed. This means that when annual income reaches £80,000, the charge is 100%, reducing the benefit to zero.
This charge can lead to a high effective marginal tax rate for taxpayers with multiple children.
What is the HICBC online service?
If you’re an employed taxpayer, you’ll be able to use the new digital service from HMRC to report the amount of Child Benefit you’ve received. You’ll then have the choice to pay through PAYE.
There will be no need for you to submit a tax return unless you have other chargeable gains.
However, taxpayers who must file returns for other reasons will still be required to report the HICBC on their returns, and if you’ve submitted a return before, then HMRC will continue to send notices.
In this case, taxpayers need to be careful, because ignoring a tax notice could incur a penalty.
Paying the HICBC in 2025
Whether HMRC’s online service will reduce the issues associated with the HICBC remains to be seen. One of the main problems has always been lack of awareness, and with the new service, most employed taxpayers won’t be used to dealing with HMRC directly.
Guidance on the Child Benefit Tax Charge is available on the government website, but if you would rather seek out personal tax advice, you can contact our accountants in Barnsley.
If you don’t want to opt out of receiving Child Benefit, the team here at gbac could help you with adjusting investments and optimising allowances to stay below the HICBC threshold.
Just call us on 01226 298 298 or send an email to info@gbac.co.uk to set up a consultation.