The ‘High Income Child Benefit Charge’ (HICBC) means that high earning parents are entitled to either a reduced child benefit or no benefit at all. This affects those families where one parent earns £50,000 or more from ‘adjusted net income’, which includes all sources of taxable income less any pension contributions and charitable donations made under the gift aid scheme.
A household that received child benefit between 6 April 2022 and 5 April 2023 where one parent earned £50,000 or more may need to pay some or all of the child benefit back. If a parent earned £60,000 or more then all of the child benefit must be paid back. The parent with the higher income would need to pay the child benefit back by completing a 2022-23 tax return even if it was the lower earning parent that actually received the benefit.
The deadline for submitting the tax return and paying the high income child benefit charge to HMRC is 31 January 2024. However, those individuals that have not needed to complete a tax return in the past will first need to register for self assessment. HMRC must be notified of the need to complete a 2022-23 tax return by 5 October 2023 to avoid having to pay a penalty.
The charge is not applicable to households for the 2022-23 tax year if they opted out of child benefit before 6 April 2022 or those in which no individual earns more than £50,000. Individuals that know they won’t be entitled to any child benefit for the next 2023-24 tax year may wish to opt out of the payments by 5 April 2023 to avoid having to file a 2023-24 tax return and repaying the benefit. Note that we always recommend filling in the child benefit claim form for each child and then opting out of payments as the initial child benefit registration provides national insurance credits to the parent making the claim, which counts towards state pension eligibility. Claiming child benefit also means that the child will automatically receive their national insurance number once they turn 16 rather than having to remember to apply for one.