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Self Assessment Tax Return

The Child Benefit Tax Charge for High-Income Families

The Child Benefit Tax Charge for High-Income Families 

Are you a high-income earner with children? Then it’s essential to understand the implications of the High-Income Child Benefit Tax Charge. This tax charge can affect families who earn over a certain amount and receive child benefit payments. In this blog post, we’ll explain the High-Income Child Benefit Tax Charge, who is eligible for it, and how to calculate it. Keep reading to learn more about the High-Income Child Benefit Tax Charge and how it could affect you. 


What is Child Benefit? 

Child Benefit is a government financial support program in the UK that provides payments to help parents or guardians raise a child. It is a non-means-tested benefit, which means it is available to all eligible parents regardless of income level.  

The purpose of Child Benefits is to provide some financial assistance to families with children, as the costs of raising a child can be significant. The benefit is typically paid every four weeks, and the payment amount depends on the number of children in the family.  

For the current 2023/24 tax year, the rate is £24 per week for the eldest or only child and £15.90 per week for each additional child. 

One person for each child can claim Child Benefits, and the parent is usually responsible for the child’s day-to-day care. However, it is essential to note that there are specific rules and requirements for eligibility, which will be discussed in more detail in the next section. 


Who is Eligible for Child Benefit? 

Child Benefit is a payment made by the government to families with children under the age of 16 (or under 20 if they stay in education). To be eligible for Child Benefit, you must be responsible for the child and live in the UK. It is available to all families, regardless of income. However, suppose you or your partner earn over £50,000 a year. In that case, you will be subject to the High-Income Child Benefit Tax Charge and must complete a self-assessment tax return. 


The High-Income Child Benefit Tax Charge 

The High-Income Child Benefit Tax Charge is a measure introduced by the UK government to claw back child benefit payments from high-earning households. If one partner earns more than £50,000 annually, they will be subject to this tax charge. The charge reduces child benefit by 1% for every £100 earned over £50,000 until it is completely withdrawn. This charge ensures that those who can afford it the most contribute to the cost of child benefits. 

If your income exceeds £60,000, the cost equals the Child Benefit received. The entire Child Benefit amount will be taxed if your income exceeds £60,000. The cost is based on the highest earner’s income and applies regardless of whether they receive the Child Benefit. 


Tips for avoiding the child benefit tax charge. 

Here are some tips to help you avoid the child benefit tax charge: 

  1. If you are close to the £50,000 threshold, consider reducing your income by contributing more to your pension or donating to charity.
  2. You can opt out of receiving child benefits so that you won’t be subject to the tax charge.
  3. Ensure you inform HMRC of any changes in your circumstances, such as a change in income or if your child stops being eligible for child benefits.

By following these tips, you can avoid or reduce the impact of the high-income child benefit tax charge on your finances. 


How to pay the child benefit tax charge. 

To pay the child benefit tax charge, you will need to include it in your self-assessment tax return. When filling out the return, you can declare the amount of child benefit you received and then calculate the tax charge accordingly. Submit your self-assessment tax return by the deadline to avoid any penalties. Staying on top of your tax obligations and paying any required amounts promptly and accurately is essential. 

If you would like to discuss your situation on high income benefit charges, we would be more than happy to assist you in understanding the best course of action to take. Additionally, we can provide support with your self-assessment tax return, making the calculation process much more manageable. You can easily book a call by clicking here: 

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