UK Budget 2024 – Blog 4 – High Income Child Benefit Charge (HICBC)
Post Author:
Anne Melville
Date Posted:
March 9, 2024
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In an effort to reduce unfairness, the thresholds for the High Income Child Benefit Charge (HICBC) will be increased from 2024/2025.
You may have to pay the HICBC if you are considered to have ‘high income’ and child benefit is being paid in relation to a child that lives with you, regardless of whether you are a parent of that child. If you are living with another person in a marriage, civil-partnership or long-term relationship, you will only be liable to HICBC if you are the higher earner of the two of you.
| 2024/2025 | 2023/2024 | |
| Child benefit ‘high-income’ threshold | £60,000 | £50,000 |
| Income level at which child benefit is fully clawed back | £80,000 | £60,000 |
From 2024/2025, the HICBC will be calculated at 1% of the child benefit received for every £200 of income above the threshold. This is a slower rate of claw back than in 2023/2024 and now means that child benefit will only be fully clawed back where income exceeds £80,000, rather than £60,000 in 2023/2024.
The HICBC does not apply if the child benefit claimant opts out from receiving the payments.
The Chancellor also announced plans to administer the HICBC on the basis of total household income, rather than the income of the highest earner in the household, by April 2026.
So what?
Disregarding for this purpose the other changes announced in the UK Budget 2024, if we take a couple claiming child benefit in respect of two children and the higher earner earns £70,000, the household will be £1,106 better off than if the threshold had not been increased.
If the higher earner instead earns £60,000, the household will be £2,212 better off in 2024/2025 and the higher earner will not be required to submit a self-assessment tax return in respect of the HICBC.
The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.
