The way families make Child Benefit repayments to HM Revenue & Customs (HMRC) is changing.
From the summer, many families will have the option to report their Child Benefit payments and pay the High Income Child Benefit Charge (HICBC) directly through their PAYE tax code instead of filing a Self-Assessment tax return.
How will it work?
For eligible employed parents, the option to pay directly through PAYE will be simpler compared to Self-Assessment.
However, those who wish to continue paying the HICBC through Self-Assessment will be able to do so.
Taxpayers who are required to file Self-Assessment tax returns for other reasons, such as self-employment, will still need to report the HICBC on their tax return.
What is the HICBC?
The HICBC is a charge on families in receipt of Child Benefit where one person has gross annual income of £60,000 or more.
For every £200 of income over this amount, the Child Benefit is paid back at a rate of one per cent.
This means that families must pay back all their Child Benefit where either partner has income in excess of £80,000.
Families who effectively receive no Child Benefit because of the HICBC still receive the other perks of Child Benefit, such as National Insurance credits and a National Insurance number for each child when they turn 16, without having to apply for one.
What should I do now?
To pay the HICBC via PAYE, you will need to register through HMRC’s online service.
HMRC will contact you when the service goes live.
If you have previously opted out of Child Benefit payments and would like to opt back in, you can restart your payments online or via the HMRC app.
