What is the High Income Child Benefit Tax Charge?
The High Income Child Benefit Tax Charge claws back child benefit from households where the highest earner has adjusted net income above £60,000. From April 2024, the threshold was raised from £50,000 to £60,000, and the taper was extended to £80,000. Above £80,000, the full child benefit is repaid through self-assessment.
How can I reduce the charge?
The charge is based on adjusted net income, which is reduced by pension contributions and Gift Aid donations. Increasing pension contributions can reduce or eliminate the charge. For example, if your income is £70,000, contributing an extra £10,000 to your pension reduces adjusted net income to £60,000 and can keep your full benefit.
Should I opt out of child benefit?
You can opt out of receiving child benefit payments while still claiming the benefit. This protects your National Insurance credits for the state pension without receiving a payment that would then be charged back. If income is consistently above £80,000, opting out of payments is often the simplest approach.