The “high income child benefit charge” (HICBC) is an unpopular tax charge, designed to claw back child benefit received from “high earners”.
The higher earner in a household can be subject to the HICBC if their income exceeds £50,000 and their household is in receipt of child benefit.
Between £50,000 and £60,000 of income, the charge is gradually clawed back, so at say £55,000 of income you are liable to repay 50% of your child benefit and by the time you hit £60,000 of income you are liable to repay 100% of your child benefit.
The charge is arguably unfair as it looks solely at the income of the higher earner in the household so if that person has income of say £60,000 and the lower earner has no income (ie. £60,000 total household income) then 100% of the child benefit must be repaid. Contrast this to a household where both people earn £50,000 each (ie. £100,000 total household income) and 0% of the child benefit must be repaid.
The government have announced that they are addressing this issue by introducing a “household based system” from April 2026 and will consult on this in due course.
In the meantime from April 2024, they have announced that the £50,000 to £60,000 band will be increased so that the child benefit charge is clawed back from £60,000 to £80,000 instead.
Not only is the starting point increased, but the band itself is doubled which results in a more gradual claw back and reduction to the marginal tax rate levied which is a welcome change.
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