HM Revenue and Customs (HMRC) has confirmed a £200 tax charge rule for UK households claiming Child Benefit. The rule applies to high income households where one partner earns an annual income exceeding £60,000, making them subject to the High Income Child Benefit Charge (HICBC). Under the current rules for the 2026/27 tax year, 1% of Child Benefit payments must be repaid to HMRC for every £200 earned above the £60,000 threshold.
Changes to the Threshold
Previously, the tax charge was set at 1% of Child Benefit for every £100 earned over a £50,000 threshold. However, from the 2024/25 tax year onwards, repayments begin once annual earnings reach £60,000, at a rate of 1% for every £200 above the limit. For households with earnings of £80,000 or more per year, all Child Benefit must be repaid to HMRC.
HMRC Statement
Confirming the charge for the 2026/27 tax year, HMRC stated: “From tax year 2024 to 2025 onwards, if you or your partner earn more than £60,000 a year, you’ll have to pay some of your Child Benefit back. If you or your partner earn £80,000 or more, you’ll have to pay all of it back. You’ll pay back 1% of your Child Benefit for every £200 you earn over the threshold. Example: Your adjusted net income is £67,600 in tax year 2024 to 2025. This is £7,600 over the £60,000 threshold. As 7,600 divided by 200 is 38, you’ll pay back 38% of your Child Benefit.”
Who is Responsible?
If both partners have adjusted net incomes over the threshold, the partner with the higher income is responsible for paying the tax charge. A partner refers to someone you are married to, in a civil partnership with, or living with as if married, and from whom you are not permanently separated.
Common Pitfalls
Because the HICBC charge is based on individual income rather than household income, some Child Benefit claimants may be unaware they face a tax charge. The charge can also apply if someone else receives Child Benefit for a child living with you, provided they contribute at least an equal amount towards the child’s upkeep.
Options for Claimants
If your income exceeds the threshold, you can choose to either receive Child Benefit payments and pay the tax charge, or opt out of payments and avoid the charge. If you opt to pay, the charge can be collected through your PAYE tax code or via Self Assessment.
Expert Advice
Andy Wood, tax expert at Tax Barrister UK, warned: “The key figure parents need to understand is adjusted net income. This is not always the same as salary, as it can include savings interest, dividends and other taxable income. Pension contributions and Gift Aid donations can reduce adjusted net income, so families should check the full calculation before assuming they are over the limit. A lot of people assume Child Benefit should simply be cancelled once they cross the threshold, but that is not always the best option. In some cases, continuing to claim Child Benefit while repaying the charge can still protect National Insurance credits and entitlement to the State Pension.”
