Child benefit charge to get simpler for employed parents
- 11th April 2025
From summer 2025 employed individuals who are affected by the High Income Child Benefit Charge (HICBC) will no longer need to file a self-assessment tax return – as long as they have no other reporting requirements. Instead, HMRC will offer a new online tool to make reporting more straightforward.
The HICBC applies when a person or their partner receives child benefit and their income exceeds £60,000 a year. As income rises the charge gradually reduces the value of the benefit until it is completely removed once income reaches £80,000.
This creates a marginal tax effect that can be particularly significant for families with more than one child. For 2025/26 the rates of child benefit are £26.05 per week for the first child and £17.25 per week for each additional child. The higher the benefit the greater the potential clawback through the HICBC.
Under the new system employed taxpayers will be able to report how much child benefit they received using a digital service. The charge can then be settled via PAYE.
This will remove the need to complete a full tax return unless the person also has other income or capital gains to report. However, if HMRC has already issued a notice to file a tax return it is vital not to ignore it – penalties still apply unless the return is formally withdrawn.
“Many people still don’t realise the child benefit charge applies to them until they receive a demand from HMRC” says Rachel Hay, Partner. “The new system is a welcome step but only works if people know they need to use it. Awareness remains one of the biggest hurdles.”
Taxpayers who are self-employed or who already complete a return for other reasons will still need to include the HICBC figure within their usual filing.
Although the charge has been in place for more than a decade confusion remains – largely because most employed individuals are not used to interacting with HMRC directly. Whether this new approach will reduce the admin burden remains to be seen.
Government guidance on the HICBC can be found here.
All data and figures referred to in our news section are correct at the date of publishing and should not be relied upon as still current.
