Thousands of households receiving Child Benefit can now settle the high income tax charge using their tax code for the first time. Child Benefit provides £26.05 weekly for the first child and £17.25 for each additional child, granted to those caring for children. However, if you or your partner have a high income, a portion of this benefit may need to be repaid.
Individuals earning over £60,000 must repay 1% of their Child Benefit for every £200 over that threshold, known as the High Income Child Benefit Charge. Once earnings exceed £80,000, the full Child Benefit amount must be repaid. Typically, the high income charge is paid via self-assessment, but now there is the option to pay it through the PAYE tax code.
To opt in for the 2024/25 tax year, ending on April 5, 2025, individuals have until January 31, 2026. If self-assessment is already required, the new PAYE option cannot be utilized. For high-income households, claiming Child Benefit without receiving payments allows for National Insurance credits towards the state pension without incurring the charge.
Child Benefit is accessible to over seven million families looking after children under 16, or under 20 in approved education or training, excluding university or BTEC qualifications. Claimants must either live with the child or contribute an amount equal to Child Benefit for their care. Child Benefit eligibility extends to fostering, adoption, or caring for a friend or relative’s child.
Dan Tomlinson, Exchequer Secretary, highlighted the simplification of the HMRC tax system, eliminating the need for many parents to file tax returns. By signing up, recipients receive a new tax code reflecting the HICBC deduction and any income fluctuations impacting Child Benefit entitlement throughout the year.