Many parents are unaware that if either of them starts to earn more than £60,000 a year, they will have to pay some of their Child Benefit back as a High Income Child Benefit Tax Charge (HICBC). Earning £80,000 or more, means they’ll have to pay it all back!

Who pays the high income child benefit tax charge?

Child benefit is offered by the Government to an individual responsible for a child under the age 16, or between 16 and 20 in full-time, ‘non-advanced’ education at school or college (not a degree), or is starting an ‘approved’ training course. There are separate rates payable for each child and no limit on the number of children who can qualify. However, there are incidents when they may become liable for HICBC at the end of each tax year.

Only one person can claim for Child Benefit. If you or your partner’s* adjusted net income exceeds £60,000, this reduces your Child Benefit payment by 1% for every £200. If your income exceeds £80,000, then the tax charge is equal to the amount of the Child Benefit payment¹. And this is still the case if you only pay for your child’s upkeep, or if the child living with you is not your own.

What is adjusted net income?

Adjusted net income is the total income charged to income tax, for example, from employment, property, dividends or savings – less specified deductions. It also includes any taxable benefits you receive from your job, like a company car or medical insurance. If you and your partner’s adjusted net income is over £60,000, the one with the higher income is responsible for paying the tax charge.

How can you reduce or avoid the high-income child benefit tax charge?

Contribute to your pension scheme: One of the most tax efficient ways is by making contributions into your pension in order to reduce your Annual Net Income (ANI). Depending how much you earn and you pay into your pension, could mean you’re able to reduce or even avoid paying HICBC.

Donate through Payroll Giving: If this scheme is offered by your employer or pension provider, any donations you give will be taken before Income Tax is taken off. As a higher rate tax payer, you would need to claim the difference between the tax paid on the donation and the amount the charity received in return when you fill in your Self Assessment tax return.

Making Charitable Donations: If you pay enough tax on your income or capital gains, donations to Gift Aid will qualify as long as they’re not more than four times what you have paid in tax in that tax year (6 April to 5 April). You can then reduce the ‘adjusted net income’ figure and reclaim your child benefit. 

Opt out of receiving Child Benefit: Or you can of course opt out of receiving payments and not pay the tax charge. However, you must still complete a Child Benefit form to say you wish to do so. But a word of warning here. If one of you earns over £60,000, but the other is not working and decides to opt out of receiving payments this means they lose out. By not claiming Child Benefit, the non-working parent will no longer be eligible to earn National Insurance credits towards the 35 years of contributions required to receive a full State Pension. You can restart your Child Benefit payments at any time.

Up-date on how to pay the high-income child benefit tax charge

If all else fails and you need to pay HICBC, the Government has introduced their ‘Pay through PAYE’ service. Once you’re registered, your payments will be set up and you won’t need to do anything else unless your circumstances change.

However, you can only pay using this service if:

• you do not need to send a tax return for another reason, for example if you become self-employed;
• it’s on or before 31 January in the year after the tax year you need to pay for;
• you are paying the tax charge for the tax year 2024 to 2025 onwards.

If you cannot pay through PAYE then you must pay through Self Assessment instead.

You can find full details on the Government website here.

Our tax planning service ranges from using personal allowances, exemptions and tax-efficient investments, to preparing for retirement or passing on wealth. Why not get in touch for a no obligation chat to see how I can help maximise your tax allowances.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any Tax relief is dependent on individual circumstances. 

Clicking a link will open a new window. Any external sites are not endorsed by St. James’s Place.

*Partner refers either to a person who you’re married to and not permanently separated from, in a civil partnership with, or living with as if you were.

1 Gov.uk –  1 June 2026

SJP Approved 01/05/2026