Changes to the high income child benefit charge mean some couples will pay less tax. Others can also benefit but must take steps to do so. What’s required and when?
HICBC recap. The high income child benefit charge (HICBC) has been contentious since it was introduced in 2013. It applies to individuals or their partners who have children and claim child benefit. Because of the unfair way in which it applies, until April 2024 a couple with one income exceeding £50,000 per annum were liable to the HICBC, while a couple with a joint income of over £50,000 per annum were not.
First Budget change. This inequity was addressed in the 2024 Spring Budget. The Chancellor announced that HMRC will consult on changes that will take account of household income rather than only that of the highest earner. While no date has been set for when changes will become effective, it’s hoped it will be no later than 6 April 2025. In the meantime, a temporary easing of the HICBC applies for 2024/25.
Second Budget change. For 2024/25 the HICBC threshold increased to £60,000 and the clawback rate is 1% for every £200 of income in excess of the threshold (half the previous rate). The effect of this is that a couple where the highest earner’s income is less than £80,000 will not lose all their child benefit to the HICBC.
Opted out. Many individuals and couples who are entitled to child benefit opted out of claiming it because they knew that the whole amount would be clawed back through the HICBC. However, because of the changes to the income threshold and rate many will now be better off claiming child benefit.
Tip. Child benefit is not given automatically, it must be claimed. If you haven’t registered for the benefit because of the HICBC, you should consider if you will now be better off doing so. To get the full entitlement for 2024/25 you must submit a claim no later than 5 July 2024 (see The next step ).
If you’re entitled to child benefit but haven’t claimed it because of the benefit charge, consider if the new limits now make a claim worthwhile. If so, you must register your claim by 5 July 2024 to ensure that you obtain the full amount for 2024/25.
The next step
HMRC's Child Benefit: Make a claim
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