Day 22: High Income Child Benefit Charge: A Comprehensive Guide for Parents

As the self-assessment deadline approaches, understanding the High Income Child Benefit Charge (HICBC) is crucial for higher earners in Gravesend and across Kent. This guide explains how the charge works and what actions you need to take to remain compliant with HMRC requirements.

Understanding the High Income Child Benefit Charge

If you or your partner earns over £50,000 and either of you receives Child Benefit, you may need to pay the High Income Child Benefit Charge. This tax charge effectively reduces the benefit of Child Benefit as income increases.

Key Thresholds and Calculations

• The charge begins at £50,000 adjusted net income
• Increases gradually by 1% for every £100 earned above £50,000
• Reaches 100% of Child Benefit at £60,000
• Applies to the higher earner, regardless of who claims the benefit

Calculating Your Adjusted Net Income

Understanding your adjusted net income is crucial for determining if HICBC applies. This includes:

• Salary and wages
• Bonuses and overtime
• Self-employed profits
• Property income
• Investment income
• Less pension contributions and Gift Aid donations

Options for Managing HICBC

1. Continue Receiving Child Benefit

Benefits of maintaining your claim:

• Protects your State Pension credits
• Maintains your child's National Insurance number registration
• Ensures eligibility for other benefits
• Flexibility to restart payments if income decreases

2. Stop Child Benefit Payments

Consider stopping payments if:

• Your income consistently exceeds £60,000
• You want to avoid completing a Self Assessment
• You prefer not handling repayments

Tax Planning Strategies

Several approaches can help manage the HICBC:

• Increase pension contributions to reduce adjusted net income
• Utilize salary sacrifice arrangements
• Make Gift Aid donations
• Consider income splitting between partners

Reporting Requirements

If affected by HICBC, you must:

• Register for Self Assessment if not already done
• Report Child Benefit received on your tax return
• Calculate and pay any charge due by 31 January
• Notify HMRC of any relevant changes in circumstances

Common Mistakes to Avoid

• Failing to register for Self Assessment
• Incorrect income calculations
• Missing reporting deadlines
• Overlooking pension contribution benefits

How MCC Partners Can Help

Our Gravesend-based team offers comprehensive support:

• Personal assessment of your HICBC position
• Strategic tax planning advice
• Self Assessment completion and filing
• Ongoing support and monitoring

Take Action Now

Don't risk penalties or unexpected tax bills. Contact MCC Partners at 01474 619 990 or email This email address is being protected from spambots. You need JavaScript enabled to view it. for expert guidance on managing your High Income Child Benefit Charge effectively.