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High Income Child Benefit Tax Charge - Don't get caught out!

The High Income Child Benefit Tax Charge (HICB) has left many people confused...and caught out lots of people. Child benefit is paid automatically, yet some people are not necessarily entitled to it in full. Confusing eh?


So what is Child Benefit?

Child benefit is a tax-free payment paid by the government to parents (or anyone responsible for raising a child).

You can claim if:

  • Your child is under 16 and in education

  • Under 18 and in education

  • You earn less than £60,000

Only one adult in the household can claim Child Benefit.


How much is it?

For 2023/24 you can claim:

  • £24 a week for your first child

  • £15.90 per week for subsequent children


What's the tax charge?

If your income (or your partners) is over £50,000 the HICB will apply to you. The charge gradually increases as your income rises from £50,000 to £60,000. Once you earn over £60,000 then you have to pay back the full entitlement.


How do I pay it?

Plans are currently being set out whereby you can pay the charge through your PAYE tax code. Until this is in place you would need to register for self assessment and submit a tax return.


What about opting out?

You can opt out of receiving child benefit, and a high number of families do. This means that you don't need to worry about paying it back or submitting a tax return. However - there are a number of factors to consider before you opt-out:


  • Claiming child benefit means you get National Insurance credits which count towards your State Pension.

  • Your child will get a national insurance number just before they turn 16 automatically if you receive child benefit. You would need to apply for this otherwise.


We hope this has been informative. If you have any questions then please do get in touch with us - katie@bluearrowaccounting.co.uk



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