Child Benefit Tax Charge – Who It Affects in 2025
If you or your partner claim Child Benefit and earn over a certain threshold, you may be affected by the High Income Child Benefit Charge (HICBC). This tax applies even if the benefit is claimed by the lower earner in the household.
Here’s what you need to know about the Child Benefit Tax Charge in 2025, who it impacts, and how to manage it.
What Is the High Income Child Benefit Charge (HICBC)?
Introduced in 2013, the HICBC is a tax on households where one individual earns above a certain income while claiming Child Benefit. It reduces or eliminates the value of the benefit through a tax charge.
Income Threshold for 2025
From April 2024, the income threshold has increased:
- The charge now starts if you or your partner earn over £60,000 per year.
- It tapers off gradually up to £80,000.
- At £80,000 or more, the entire Child Benefit is effectively clawed back via tax.
How the Charge Works
The charge is 1% of the Child Benefit received for every £200 earned over £60,000. This means:
- At £60,000 you lose 0%
- At £70,000 you lose 50%
- At £80,000 you lose 100%
If either partner earns over £80,000, they must repay the full amount of Child Benefit received for the year.
Who Must Pay the Charge?
- The person with the higher income in the household (even if they’re not the one who claimed the Child Benefit)
- Applies whether married, civil partners, or cohabiting
You must register for Self Assessment and report the charge via your tax return.
Options for Affected Families
- Continue to claim Child Benefit and pay the tax charge via Self Assessment
- Opt out of receiving payments but still register to ensure National Insurance credits for the child’s carer
Choosing to opt out avoids the need to repay, but can impact your tax credits or pension record if you don’t stay registered.
National Insurance Credit Importance
Even if you don’t need the payments, claiming Child Benefit helps protect:
- State pension entitlement for parents not in paid employment
- Child’s NI number registration when they turn 16
Common Mistakes to Avoid
- Not realising that a bonus or promotion could tip you over the threshold
- Forgetting to register for Self Assessment if affected
- Assuming the lower earner’s income is what matters
How Eclat Accountancy Can Help
At Eclat Accountancy, we help:
- Calculate your HICBC liability
- File your Self Assessment tax return
- Advise on whether to opt out of payments
- Ensure National Insurance records remain protected
Final Thoughts
The Child Benefit Tax Charge in 2025 continues to affect more families due to wage inflation and frozen thresholds. Understanding your position and planning accordingly can help you avoid unexpected tax bills and protect valuable benefits.
Speak to Eclat Accountancy today for tailored advice on managing your Child Benefit and tax obligations
