His Majesty's Revenue and Customs (HMRC) has issued an alert to Brits earning between £60,000 and £80,000 per year. The department has launched a new digital service designed to help people avoid making fiddly tax returns.
While you can still receive Child Benefit if you earn between £60,000 and £80,000, you have to pay a portion of it back through a tax known as the High Income Child Benefit Charge (HICBC). HMRC said you pay back 1% of your Child Benefit for every £200 you earn over £60,000. For example, if you earn £70,000, you are exactly halfway through the bracket and will pay back 50% of the benefit. However, if you earn £80,000 or more, the tax charge equals 100%, meaning the whole of the benefit is clawed back.
New digital service
HMRC said in a post on X: "Just had a baby? Congratulations! If you or your partner earn between £60,000 and £80,000, you can still claim Child Benefit. Our new digital service lets you pay the High Income Child Benefit Charge through your salary – no tax return needed."
It adds online: "You or your partner may have to pay the High Income Child Benefit Charge if either of you receives Child Benefit and at least one of you earns more than the threshold. This means you will have to pay some or all of your Child Benefit back."
The charge may also apply if someone else gets Child Benefit for a child living with you and they contribute at least an equal amount towards the child’s upkeep. It does not matter if the child living with you is not your own child.
How the charge is calculated
It's important to bear in mind that the system is based on the highest individual earner, not combined income. For example, if you and your partner earn £55,000 each, combining to make £110,000, you will keep 100% of your Child Benefit because neither of you individually crosses the £60,000 mark.
However, if one parent earns £75,000 and the other earns nothing, you will be hit by the tax charge. HMRC is advising people to fill out the online form even if you don't want the hassle of receiving the money and paying it back.
If you do choose to receive the cash payments, the highest earner must pay the tax charge. This can be done through your tax code (PAYE) or through a self-assessment tax return annually.
What is Child Benefit?
Child Benefit is designed to support anyone responsible for bringing up a child who is either under 16 or under 20 if still in approved education or training. There’s no limit to how many children you can claim for.
The benefit is worth £27.05 per week for your eldest child or only child, and £17.90 a week for each additional child. It is paid every four weeks.
By claiming Child Benefit, you can get: an allowance paid to you for each child - you’ll usually get it every 4 weeks, National Insurance credits which count towards your State Pension, and a National Insurance number for your child without them having to apply for one - they’ll usually get the number shortly before they turn 16 years old.
