HICBC 2024–25 Refresh: What Parents Need to Know About the High Income Child Benefit Charge

The High Income Child Benefit Charge (HICBC) has always been a tax trap for families—especially those unaware it even applies to them. With new changes effective from 6 April 2024, more households are once again affected, while others may now be entitled to restart their Child Benefit claims.

In this guide, we explain:

• What the HICBC is,
• What’s changed for 2024–25,
• Who’s affected,
• And what planning strategies you can consider.

What Is the High Income Child Benefit Charge (HICBC)?

HICBC is a tax charge that applies when:

• Anyone in your household receives Child Benefit, and
• You or your partner has adjusted net income (ANI) over a set threshold.

The person with the higher income is liable for the charge—even if they’re not the one actually receiving Child Benefit.

What’s New for 2024–25?

From 6 April 2024, two key changes came into effect:

1. Threshold Raised to £60,000

• Previously: HICBC started at £50,000.
• Now: The threshold is £60,000.
• Meaning: You won’t pay any HICBC unless your adjusted net income exceeds £60,000.

2. Taper Band Extended to £80,000

• Between £60,000 and £80,000: You’ll gradually lose Child Benefit.
• At £80,000 or more: 100% of the Child Benefit is clawed back via the HICBC.

This effectively creates a “taper” range:

• 1% of the benefit is repaid for every £200 over £60,000.

Example: Family with Two Children

• Child Benefit (2024/25) for two children: £2,212.60

• If your income is £70,000:

  • You’re £10,000 over the £60,000 threshold.
  • That’s 50 lots of £200 → 50%
  • You’ll repay 50% of the benefit = £1,106.30

Who Needs to Act?

If:

• You claim (or want to claim) Child Benefit, and
• Either you or your partner earns over £60,000…

Then you may:

• Need to register for Self Assessment (if you haven’t already),
• File a tax return to report and repay HICBC,
• OR consider whether you want to opt out of receiving the payments (but still get the National Insurance credit).

Planning Tips to Reduce or Eliminate the HICBC

Here are some ways to manage your adjusted net income and possibly retain more Child Benefit:

1. Make Pension Contributions

• Personal pension contributions reduce adjusted net income.
• Contributing enough to bring income below £60,000 could wipe out the HICBC entirely.
• You also get tax relief—so it’s a double win.

2. Use Gift Aid Donations

• Charitable donations via Gift Aid also reduce your adjusted net income.
• Like pensions, they’re grossed up, so a £1,000 donation gives £1,250 of income reduction.

3. Salary Sacrifice

• Ask your employer to swap part of your salary for pension contributions, electric vehicles, or extra holidays.
• Lowers your taxable income and may avoid the charge.

4. Share Income with a Lower-Earning Partner

• If your partner earns less and you’re the higher earner, explore ways to equalise income.
• For example, rebalancing dividends or profit shares (where appropriate and legal).

5. Restart a Claim if You Previously Opted Out

With the threshold increased, some families below £60,000 may now:

• Be eligible for full Child Benefit with no charge, and
• Want to restart payments by contacting HMRC.

Remember: Even if you opt out of payments, you should still register to protect your child’s NI credits.

Key Dates to Remember

 Final Thoughts

While the new £60,000 threshold brings some relief, many families are still caught off guard by the HICBC. If you’re unsure whether it applies—or want to explore ways to reduce it—early planning is key.

Need Help with HICBC or Tax Planning?

At Merranti Accounting, we help clients:

• Review income levels for HICBC impact,
• Plan pension and donation strategies,
• Ensure correct reporting through Self Assessment,
• And support with Child Benefit claims or reclaims.

Contact us today for a confidential review—especially if your income is hovering around the new thresholds.