HM Revenue & Customs (HMRC) has issued an alert to parents earning between £60,000 and £80,000, urging them to check whether they need to repay some or all of their Child Benefit. The warning relates to the High Income Child Benefit Charge, which applies when one parent or partner claims Child Benefit and either person has an adjusted net income above £60,000.
Threshold Changes
From the 2024 to 2025 tax year onwards, the threshold increased to £60,000. This means households where one person earns above this amount may have to repay part of their Child Benefit. Those earning £80,000 or more may have to pay the full amount back.
Expert Insight
Andy Wood, a tax expert at Tax Barrister UK, said: “Many families do not realise that Child Benefit can become repayable once one parent or partner earns over £60,000.” He added: “The charge is based on individual income rather than household income, which can catch people out. A couple earning £59,000 each may not face the charge, while a household with one earner on £65,000 could.”
How the Charge Works
Under the current rules, parents pay back 1% of their Child Benefit for every £200 of adjusted net income above the £60,000 threshold. For example, someone with adjusted net income of £67,600 would be £7,600 over the threshold. As £7,600 divided by £200 is 38, they would need to repay 38% of their Child Benefit. The charge reaches 100% once income hits £80,000.
Mr Wood explained: “The key figure parents need to understand is adjusted net income. This is not always the same as salary, as it can include things like savings interest, dividends and other taxable income.” He noted that “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.”
Additional Considerations
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. Where both partners earn above the threshold, the higher-earning partner is responsible for paying the charge.
Mr Wood said: “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.”
HMRC says affected households can either continue receiving Child Benefit and pay the tax charge or opt out of payments entirely to avoid the charge.
