High-Income Child Benefit Charge – Thresholds Raised for 2024/25
The High-Income Child Benefit Charge (HICBC) continues to apply to the higher earner in a household where one partner receives Child Benefit, and either partner has income above a specified threshold.
For the 2024/25 tax year, the Chancellor has announced the first increase in the HICBC thresholds since the charge was introduced in 2012/13.
This change will ease the impact of the charge for many middle-income families and bring fairness back to a system that has long been criticised for being outdated.
Key Changes for 2024/25
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The income threshold at which the HICBC begins has been raised from £50,000 to £60,000.
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The income band over which the charge is applied has doubled from £10,000 to £20,000.
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The clawback rate has changed from 1% for every £100 of income above the threshold to 1% for every £200.
This means that Child Benefit will now be fully withdrawn when income reaches £80,000, compared with £60,000 under the previous rules.
These reforms significantly reduce the number of families affected by the charge and ensure that some entitlement remains for those earning between £60,000 and £80,000.
Background to the HICBC
The High-Income Child Benefit Charge was introduced in January 2013 to reduce Child Benefit payments for higher earners without directly means-testing the benefit.
It operates by adding a tax charge to the income of the higher earner in the household, effectively clawing back part or all of the benefit.
The threshold had remained fixed at £50,000 for over a decade, despite inflation and wage growth, meaning that more families had gradually been drawn into the charge each year.
The 2024/25 increase therefore represents the first meaningful adjustment to reflect modern income levels.
How the Charge Works
The HICBC is calculated as 1% of the total Child Benefit for every £200 of income above £60,000.
Once income reaches £80,000, the full amount of Child Benefit is clawed back.
Example
Emma and James have two children, and Emma claims Child Benefit of £2,212.60 for 2024/25.
James earns £70,000 and Emma has no other income.
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James’s income exceeds the £60,000 threshold by £10,000.
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The charge is therefore 50% of the total benefit (1% for each £200 above the limit).
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Their HICBC is £1,106.30, leaving them with £1,106.30 of net Child Benefit retained.
Under the old rules, the entire benefit would have been lost once income exceeded £60,000.
Self Assessment Requirements
The HICBC is a common reason individuals must register for Self Assessment and file a tax return, even if their income is otherwise taxed under PAYE.
If the charge applies:
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It must be reported and paid through Self Assessment, or
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The family can opt out of receiving Child Benefit to avoid future charges.
With the higher threshold, many families who previously opted out may now wish to reinstate their Child Benefit claim.
Future Reform – A Household-Based Approach
The Chancellor also announced plans to reform the HICBC from April 2026, shifting to a household-based system.
Under the new approach, the charge will be calculated on the combined income of both partners, rather than just the higher earner.
This change aims to address long-standing fairness concerns — for example:
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A couple each earning £59,000 currently faces no charge,
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While a household with one partner earning £80,000 loses the entire benefit.
However, implementing this reform will be complex, as HMRC currently assesses tax on an individual basis and does not have automatic access to household income data.
Summary of Key Figures
| Tax Year | Start of HICBC | Full Withdrawal | Clawback Rate | Basis of Charge |
|---|---|---|---|---|
| 2023/24 | £50,000 | £60,000 | 1% per £100 | Individual |
| 2024/25 | £60,000 | £80,000 | 1% per £200 | Individual |
| 2026/27 (proposed) | Household-based | Household-based | To be confirmed | Household |
What This Means for Families
The new thresholds will:
- Bring many families back into eligibility for Child Benefit;
- Reduce the amount clawed back for those earning between £60,000 and £80,000; and
- Encourage some who previously opted out to reclaim payments.
However, anyone with income above £60,000 will still need to consider their reporting obligations and potential exposure to the charge.
How Merranti Can Help
At Merranti Accounting, we can help you determine whether you are affected by the High-Income Child Benefit Charge, assist in reinstating your claim, and ensure Self Assessment compliance where required.
We can also advise on income planning strategies to manage exposure to the charge and prepare for the 2026 household-based changes.
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