FOI release

High Income Child Benefit Charge

Updated 14 December 2023

The High Income Child Benefit Charge (HICBC), introduced in January 2013, is a tax charge that applies to anyone with an income over £50,000 who gets Child Benefit, or whose partner gets it.

How the charge works

Anyone who has to pay the charge will need to pay an amount equivalent to some or all of the Child Benefit that they or their partner is entitled to receive. The tax charge increases gradually for taxpayers with incomes between £50,000 and £60,000.

The amount to pay depends on an individual’s ‘adjusted net income’, and the amount of Child Benefit the claimant is entitled to receive. Adjusted net income is total taxable income minus certain tax reliefs, for example: trading losses (for the self-employed), Gift Aid charity donations, and pension contributions.

The charge is equal to one per cent of a family’s Child Benefit for every £100 of adjusted net income over £50,000 each tax year. If an individual’s adjusted net income is over £60,000, the charge equals the total amount of the Child Benefit.

Families can use the Child Benefit calculator to work out how much tax they may have to pay.

Paying the charge

To pay the charge, individuals must submit a Self Assessment tax return each tax year, even if they are employed, and normally pay their tax through Pay As You Earn (PAYE).

Individuals who register for Child Benefit, will get National Insurance (NI) credits which protect their future State Pension entitlement. Registering for Child Benefit also means the child is allocated a National Insurance number automatically at age 16.

Where an individual is currently receiving Child Benefit and they or their partner may need to pay HICBC, they can either:

• continue to get Child Benefit payments and pay any charge at the end of each tax year via Self Assessment

• continue with a Child Benefit claim, but choose not to receive Child Benefit payments, and therefore not have to pay the tax charge – known as ‘opting out’. However, individuals must pay any tax charge owed for each tax year up to the date they, or their partner opt out of receiving Child Benefit payments

Statistics on the number of individuals with a HICBC liability, the associated revenue from those individuals, and Child Benefit opt outs are now published as part of the annual Child Benefit National Statistics.

Publicity and campaigns

HMRC ran an external marketing campaign when HICBC was introduced and wrote to around 800,000 taxpayers letting them know how they might be affected, supported by awareness adverts in national daily newspapers and other channels.

Since then, HMRC continues to use a range of channels to raise awareness of HICBC and help taxpayers understand what they need to do to pay the charge. HMRC does this both through its communication channels, including direct letters to customers, the new Child Benefit service available online or through the HMRC app, and by working with partners and other relevant stakeholders who help us spread the message further. HMRC also runs a series of marketing campaigns aimed at highlighting the availability of Child Benefit and raising awareness of HICBC.

HMRC continues to send letters to those customers for whom the following statements apply:

• their income means they may need to pay the charge
• they or their partner were in receipt of Child Benefit payments
• they were not at that time in Self Assessment – and so needed to register to pay the charge

Chart 1: The number of letters issued by HMRC to customers to remind them what they need to do to pay HICBC, for 2018 to 2019 tax year to 2022 to 2023 tax year

Year	Number of letters
2018 to 2019	79,726
2019 to 2020	73,668
2020 to 2021	93,927
2021 to 2022	74,558
2022 to 2023	127,855

Penalties for not paying the charge

HMRC check taxpayer records each year and, where the relevant information is held, write to customers who may need to register for Self Assessment to pay HICBC.

Since HICBC has been introduced, HMRC has also carried out compliance checks on those who either did not register for Self Assessment to pay the charge or paid the incorrect amount on their Self Assessment tax return.

Chart 2: A breakdown of the number of compliance checks by the tax year they were opened

Year	Customers who have not registered for Self Assessment	Customers who have returned the incorrect amount
2012 to 2013	0	0
2013 to 2014	22	5
2014 to 2015	8,815	12,465
2015 to 2016	1,811	36,394
2016 to 2017	4,090	33,804
2017 to 2018	39,158	25,326
2018 to 2019	41,257	22,334
2019 to 2020	61,881	63,713
2020 to 2021	22,612	22,941
2021 to 2022	15,434	28,521
2022 to 2023	251	446

In 2022 to 2023 we focused our efforts on continuing to raise awareness of HICBC and supporting taxpayers to comply. As a result, those who have amended their existing Self Assessment tax return or filed a return (when applicable) will not need additional compliance checks. We will be reviewing this approach and assess its impact on overall compliance to HICBC. When individuals do not comply with the rules, we will work with them to put things right and get them on the right track in the future.

Notes:

• HICBC was introduced in 2013, therefore there were no compliance checks in 2012 to 2013 tax year

• there were less than 5 customers who returned the incorrect amount in 2013 to 2014 tax year, however, this cannot be presented in the chart

Chart 3: The percentage of customers HMRC contacted who agreed that tax was owing

Year	Percentage
2012 to 2013	0
2013 to 2014	92
2014 to 2015	80
2015 to 2016	87
2016 to 2017	89
2017 to 2018	92
2018 to 2019	95
2019 to 2020	96
2020 to 2021	92
2021 to 2022	94

Chart 4.1: A breakdown of the penalties issued by the corresponding tax year

Year	Number of penalties issued
2012 to 2013	16,847
2013 to 2014	31,979
2014 to 2015	46,478
2015 to 2016	47,862
2016 to 2017	20,729
2017 to 2018	22,258
2018 to 2019	10,640
2019 to 2020	5,237
2020 to 2021	67

Chart 4.2: The value of penalties issued by the corresponding tax year

Year	Amount of penalties (£m)
2012 to 2013	1.1
2013 to 2014	4.5
2014 to 2015	6.4
2015 to 2016	5.9
2016 to 2017	1.5
2017 to 2018	4.6
2018 to 2019	2.7
2019 to 2020	1.9
2020 to 2021	0.0

The time limit to notify liability to income tax for 2022 to 2023 was by 5 October 2023. Taxpayers are liable to a financial penalty if notification of liability is not made within the 6 month time limit. The maximum penalty is the net amount of tax due at 31 January following the tax year in which the liability arises. If a taxpayer makes a Self Assessment tax return and makes a full payment of their liability before 31 January, then no penalty will be charged.

Note: the value of penalty figures have been independently rounded to the nearest hundred thousand

Penalty review

HMRC announced a review of HICBC failure to notify penalties in November 2018 with a view to cancelling and refunding those which had been paid where the customer had a reasonable excuse for not meeting their tax obligation.

Following feedback, HMRC took the decision to review cases where a ‘Failure to Notify’ penalty was issued to customers who did not register for HICBC for the tax years 2013 to 2014, 2014 to 2015 and 2015 to 2016. This included customers who became liable to HICBC because their income had gone up over £50,000 in or after the 2013 to 2014 tax year or who had entered a new relationship. Penalties were not refunded to customers who were liable to HICBC when it was introduced in 2013, as HMRC had run a high-profile marketing campaign and written to families affected by the introduction of the charge. Over £1.8 million of HICBC penalties were refunded as a result of the review.

Appeals and reviews

Customers who disagree with the amount of HICBC they have been charged can ask HMRC to appoint a specialist officer to act in a neutral capacity to help resolve the dispute, or they can apply to have their appeal heard by the First-tier Tax Tribunal. The volumes of statutory reviews and appeals to the First-tier Tribunal, by tax year, are set out below.

Statutory Reviews

Chart 5: The volumes of statutory reviews to the First-tier Tribunal, by tax year

Year	Volume of statutory reviews
2017 to 2018	129
2018 to 2019	123
2019 to 2020	526
2020 to 2021	706
2021 to 2022	298
2022 to 2023	514

Appeals to the First-tier Tribunal

Chart 6: The volumes of appeals to the First-tier Tribunal, by tax year

Year	Volume of appeals
2016 to 2017	1
2017 to 2018	85
2018 to 2019	147
2019 to 2020	149
2020 to 2021	309
2021 to 2022	171
2022 to 2023	159

Note: these figures include hearings for late appeals, discovery assessments, penalty assessments and appeals against closure notices

Further information

You can see an overview of Child Benefit and the High Income Tax Child Benefit Charge.

Requests for information under the Freedom of Information Act can be emailed to HMRC.