The High Income Child Benefit Charge (HICBC) applies to a parent whose income exceeds £50,000 in a tax year and who is in receipt of Child Benefit. If both parents income exceeds £50,000, the charge will apply to the highest income earner. The charge claws back the financial benefit of receiving Child Benefit either by reducing or removing it entirely.
If you or your partner have exceeded the £50,000 threshold during the 2018-19 tax year then you must take action and if you or your partner continue to receive Child Benefit you must pay any additional tax owed for 2018-19, on or before 31 January 2020.
The HICBC is levied at the rate of 1% of the full Child Benefit award for each £100 of income between £50,000 and £60,000. If your income exceeds £60,000, the amount of the charge will equal the amount of the Child Benefit received.
HMRC’s guidance on Child Benefit insists that if the HICBC applies to you or your partner, it is still worthwhile to claim Child Benefit for your child as this can help to protect your State Pension and will make sure your child receives a National Insurance number.
You can choose to keep receiving Child Benefit and pay the tax charge through self-assessment or stop receiving Child Benefit and not pay the charge.