Following changes announced in the Spring Budget, it is estimated that some 180,000 couples eligible for child benefit will no longer be caught by the High Income Child Benefit Charge and should restart their claims from 6 April 2024.

High Income Child Benefit Charge threshold increased

The changes to the High Income Child Benefit Charge (HICBC) announced in the Spring Budget have now been incorporated into the latest Finance Bill and are scheduled to take effect from 6 April 2024. The increase in the threshold for the tax charge was good news, although many were lobbying for the charge to be removed completely. HICBC is intended to claw back child benefit where the higher earner in a relationship has adjusted income in excess of £60,000 (£50,000 up to 2023/24). The claw back rate will then be 1% for every £200 of net income in excess of £60,000 with full recovery of child benefit where net income is £80,000 or more.

Do you now need to restart your child benefit claim?

In recent years, rather than pay the tax charge, many couples have chosen not to claim child benefit. It is estimated that some 180,000 eligible couples will no longer be caught by the HICBC and should restart their claims from 6 April 2024. This can be done by using an online claim form.

Example

Joshua and Amy have 2 children for whom they are eligible for child benefit. Joshua is the higher earner and his income was £68,000 in 2023/24, which is scheduled to increase to £70,000 in 2024/25. In 2023/24 the HICBC would have been 100% of the child benefit received. Their child benefit for 2024/25 is £25.60 for the first child, then £16.95 for each additional child = £42.55 x 52 = £2,212.60 p.a.

Based on Joshua’s £70,000 net income there would be a 50% HICBC for 2024/25 of £1,106.30.

Get in touch with the RA Accountants’ Team

If you would like to discuss High Income Child Benefit Charge and other personal tax matters, please get in touch with our tax experts. We would be very pleased to hear from you.

Find out more
RA Accountants’ Budget Summary – see page 5
Gov.uk: High Income Child Benefit Charge

This article is for guidance only and professional advice should be obtained before acting on any information contained in them. No responsibility can be accepted for loss occasioned howsoever to any person as a result of action taken or refrained from as a result of reading.