Introduction
Child Benefit is a tax-free payment from the government to support families with children. However, the High Income Child Benefit Charge (HICBC) means that if you or your partner earn above a certain threshold, some or all of the benefit must be repaid through a tax charge. Many higher earners simply stop claiming Child Benefit, believing it is not worth the hassle. But this can be a mistake – especially for non-working partners or those making pension contributions. This guide explains how the charge works, when you should still claim, and legal strategies to reduce or eliminate the charge.
Based on rules as of November 2025. Always verify current rates with official sources.
What Is Child Benefit and Who Qualifies?
Child Benefit is paid to anyone responsible for a child under 16 (or under 20 if they are in approved education or training). The rates (for illustration, as of 2025/26):
- Eldest or only child: £25.60 per week (approx £1,331 per year)
- Each additional child: £16.95 per week (approx £881 per year)
Child Benefit is non-taxable income – but the High Income Child Benefit Charge can claw it back.
Eligibility: You do not need to be working or have paid National Insurance to claim Child Benefit. Even if you intend to repay it all through the charge, claiming is still beneficial for some families (explained below).
The High Income Child Benefit Charge (HICBC)
The HICBC applies when either you or your partner (if you live together) has an individual income above £50,000 per year. It is based on the highest earner’s income, not household income.
How the charge works:
- If the highest earner’s income is between £50,000 and £60,000, the charge is 1% of the Child Benefit received for every £100 of income above £50,000.
- If the highest earner’s income is £60,000 or above, the charge equals 100% of the Child Benefit received (you pay back every penny).
Example: A couple has one child, receiving £1,331 Child Benefit per year. The higher earner earns £55,000. Income above £50,000 = £5,000. £5,000 / £100 = 50. Charge = 50% of £1,331 = £665.50. Net benefit received = £665.50.
If the higher earner earns £60,000+, the charge is 100% (£1,331), so net benefit is zero.
Why You Should Still Claim Even If You Pay It All Back
Many higher earners stop claiming Child Benefit entirely once they realise they have to repay it. This is often a mistake for three reasons:
1. National Insurance credits. Claiming Child Benefit for a child under 12 gives the claimant (the person who receives the benefit) automatic National Insurance credits. These credits count toward your State Pension. If you are not working or earn below the NIC threshold, these credits protect your pension entitlement. A non-working parent who stops claiming Child Benefit loses these credits.
2. Automatic registration for child’s National Insurance number. HMRC uses Child Benefit records to automatically issue a National Insurance number to your child when they turn 16. If you never claimed, you will need to apply manually.
3. If your income drops. If you are close to the £60,000 threshold (e.g., £62,000) but might have a lower-income year in the future (maternity leave, redundancy, career break), you would need to have claimed Child Benefit to receive it in that lower year. You cannot claim retrospectively for years you did not claim.
Recommendation: Always claim Child Benefit, even if you expect to pay back 100%. Then, if you end up owing the full charge, you can choose to repay it through Self Assessment. The credits and future benefits outweigh the administrative hassle.
How to Repay the Charge: Self Assessment
If you or your partner earns above £50,000, the higher earner must report the Child Benefit received and pay the HICBC through Self Assessment.
Process:
- Register for Self Assessment (if not already registered).
- Each tax year, complete the Child Benefit section of your tax return.
- HMRC calculates the charge based on your income and the Child Benefit received.
- The charge is added to your tax bill.
If both partners earn above £50,000: The higher earner is responsible for the charge. Only one person pays.
If your income varies: The charge is based on your income for the tax year. If you earn £58,000 one year and £52,000 the next, the charge changes accordingly.
Legal Strategies to Reduce or Eliminate the Charge
Because the HICBC is based on “adjusted net income” (income after certain deductions), you can reduce your income below the thresholds by making pension contributions or charitable donations.
Strategy 1: Increase pension contributions (most effective)
Pension contributions reduce your adjusted net income. If you earn £60,000, a £10,000 gross pension contribution (made from your payslip or directly) brings your adjusted net income down to £50,000 – eliminating the charge entirely.
Example: You earn £65,000 and have one child (£1,331 Child Benefit). Without pension contributions, you owe the full £1,331 charge. If you contribute £15,000 to your pension (gross), your adjusted net income becomes £50,000, and the charge is zero. The pension contribution costs you £9,000 after tax relief (if you are a higher-rate taxpayer) – but you keep the £1,331 Child Benefit and have £15,000 in your pension.
Strategy 2: Make Gift Aid charitable donations
Gift Aid donations also reduce adjusted net income. For every £100 you donate, your adjusted net income reduces by £100 (for higher-rate taxpayers, you also claim additional relief). However, you would need to donate large amounts to move from £60,000 to £50,000 – less practical than pension contributions.
Strategy 3: Salary sacrifice arrangements
If your employer offers salary sacrifice (exchanging salary for non-cash benefits like pension contributions, childcare vouchers, or cycle to work), this reduces your gross salary before tax. Lower gross salary means lower adjusted net income.
Important: The HICBC looks at the higher earner’s individual income, not household income. If you and your partner both earn £49,000, there is no charge – even though household income is £98,000. If one partner earns £55,000 and the other earns £0, the charge applies.
Practical Example: Should You Claim or Not?
Scenario: Married couple, two children. Higher earner earns £65,000. Lower earner does not work. Child Benefit for two children = £1,331 + £881 = £2,212 per year.
Option A (do not claim): No Child Benefit received. No HICBC. Lower earner receives no NIC credits – may reduce State Pension.
Option B (claim but pay full charge): Claim £2,212. Pay £2,212 through Self Assessment. Net benefit = £0. But lower earner receives NIC credits (worth roughly £250 per year toward State Pension) and child gets automatic NI number.
Option C (claim and increase pension contributions): Higher earner contributes £15,000 to pension (gross). Adjusted net income becomes £50,000. Charge = £0. Keep full £2,212 Child Benefit. Pension contribution costs higher earner £9,000 after tax relief (40% of £15,000). Net benefit = £2,212 cash + £15,000 in pension – £9,000 out of pocket = £8,212 better off than Option A.
Option C is clearly superior – but only if you can afford the pension contribution.
What If You Are Newly Above the Threshold?
If you have recently received a pay rise that pushes you over £50,000 (or £60,000), you have choices:
- Do nothing and pay the charge – simplest, but you lose some or all of the benefit.
- Increase pension contributions – reduces your income for charge purposes.
- Ask your employer to adjust your pay – for example, taking extra holiday or buying benefits through salary sacrifice.
You can also choose to stop claiming Child Benefit and ask HMRC to stop the payments. If you go this route, you should still complete the Child Benefit claim form but tick the box that says you do not want to receive payments. This preserves the NIC credits without the repayment hassle.
Key Takeaways
- Always claim Child Benefit – even if you expect to repay it. You protect NIC credits and your child’s NI number.
- The High Income Child Benefit Charge applies above £50,000 – 1% clawback per £100 up to £60,000, then 100%.
- Pension contributions reduce adjusted net income – can eliminate the charge entirely.
- Only the higher earner’s income matters – two earners at £49,000 each pay no charge.
- Use Self Assessment to repay – HMRC calculates the charge based on your tax return.
This article is for general information and educational purposes only. It does not constitute financial advice. Tax rules, allowances, and product terms may change. Always check with HMRC or an FCA-authorised adviser for your personal circumstances.