CCM18320 - Child Benefit and Tax Credits: High Income Child Benefit Charge (HICBC)
A High Income Child Benefit Charge (HICBC) occurs when either the recipient of Child Benefit payments or their partner has an adjusted net income (ANI) of more than £50,000. The person with the higher income will be liable to pay the HICBC on some, or all, of the Child Benefit (ChB) payments.
If these conditions apply, the customer and their partner should jointly decide whether to opt out of getting ChB payments and not have to pay the tax charge, or continue getting ChB payments and pay the charge via Self-Assessment.
The charge increases gradually for those with an ANI between £50,000 and £60,000 and is equal to one per cent of a family’s Child Benefit for every £100 of ANI that is over £50,000 each year. If the customer or their partner has an ANI between £50,000 and £60,000, the tax charge will be less than the total amount of ChB, so they may decide to keep getting ChB payments and pay HICBC. If the customer or their partner has an ANI of more than £60,000 the tax charge will be equal to the total amount of ChB they are entitled to, so they may decide to opt out of receiving ChB payments and not have to pay the tax charge, although they will still have to pay the charge on the ChB payments they did get.
If a customer decides to opt out of getting ChB payments, they would still have an active ChB claim, unless, due to a change of circumstances, entitlement conditions are no longer satisfied. They should therefore continue to notify us of any relevant change of circumstances. By claiming ChB, customers get National Insurance credits, which count towards their State Pension, and their child will get a National Insurance number without having to apply for one. They’ll usually get the number before they turn 16 years old.
Only the ChB customer or someone with the appropriate authority to act on the customer’s behalf can decide to opt out of, or start getting ChB payments. If the claimant’s partner is the person with the ANI over £50,000, it is the partner who is liable to the tax charge, not the claimant. Where both the claimant and their partner have an ANI over £50,000, the person with the highest ANI will be liable to the tax charge.
The person who is liable for the tax charge will need to register for Self-Assessment in order to pay the charge, if they are already not in SA.