The HICBC (High Income Child Benefit Charge) Just Got Simpler
If you’ve been filing a tax return solely because you need to pay the HICBC (High Income Child Benefit Charge), there’s good news. HMRC has launched a new service that could take you out of self-assessment altogether, allowing you to pay the charge directly through your salary instead.
For many families, this could mean one less tax return to worry about each year. But before you make the switch, there are several essential things you need to understand.
What Is the HICBC?
Child benefit is paid to families with children, but if you or your partner earns over a certain amount, you’ll need to pay some or all of it back through tax. This payback is called the High Income Child Benefit Charge (HICBC).
The current rules are:
- If the higher earner in your household has an adjusted net income of £60,000 or more, you’ll start paying the charge
- You’ll pay back 1% of your child benefit for every £200 over £60,000
- Once the higher earner’s income reaches £80,000, you’ll have paid back all of the benefit
For example, if you earn £70,000, you’d be £10,000 over the threshold. That’s fifty £200 increments, so you’d pay back 50% of the child benefit you received.
It’s worth noting that these thresholds increased in April 2024. Previously, the charge started at £50,000 and reached 100% at £60,000, so if you’re reading older information online, those figures are now out of date.
How Did You Pay Before?
Until now, everyone liable for this charge had to complete a self-assessment tax return each year. For many people—particularly those who only receive income from employment—this was frustrating. Filing a tax return meant registering for self-assessment, keeping records, remembering deadlines, and potentially paying an accountant’s fees, all to report a single charge.
Whilst the tax could sometimes be collected through your tax code in a later year (if it was under £2,000), you still had to file the return to report it in the first place.
What’s Changed with HICBC?
HMRC’s new service allows you to pay the HICBC directly through PAYE—the same system that takes income tax and National Insurance from your salary. Using PAYE to pay back means no more annual tax returns —at least not for this purpose.
According to HMRC, around 440,000 people were paying this charge in 2022/23. They estimate that approximately 100,000 of these people could benefit from the new service and will receive letters encouraging them to use it.
Who Can Use the New Service?
The new PAYE service is only suitable if self-assessment returns are your only reason for filing a tax return. You can use it if:
- You’re an employee who receives all your income through PAYE.
- Your only reason for filing tax returns is to pay the High Income Child Benefit Charge.
- You don’t have any other income or circumstances that require a tax return (such as rental income, self-employment, or capital gains)
You cannot use this service if you need to file self-assessment returns for any other reason. In those cases, you’ll need to continue reporting the charge on your tax return as before.
How Do You Switch?
The process isn’t automatic. If you want to use the new service, you’ll need to take action:
- De-register from self-assessment yourself. HMRC won’t do this automatically. You can do this through the GOV.UK self-assessment page.
- Wait approximately one day.
- Use the HICBC PAYE service to report your charge.
A Word of Caution About Timing
There’s an important transitional issue to be aware of. If you’re switching to the PAYE service for 2025/26 but still need to file a 2024/25 tax return, you could end up with charges for both years collected through your PAYE code in the same tax year.
What does this mean in practice? Your tax code adjustment could be larger than expected, reducing your monthly take-home pay more than you anticipated. If you’re switching partway through the tax year, it’s worth understanding how this might affect your household budget.
Should You Stop Receiving Child Benefit Altogether?
If your income is over £80,000, you’ll be paying back 100% of the child benefit anyway. In this situation, you might wonder whether it’s worth the hassle of receiving payments only to pay them back.
Should you wish to opt out of receiving child benefit payments, you can do this through several methods:
- HMRC’s online service
- Completing an online form
- Phoning or writing to the Child Benefit Office
However, even if you choose not to receive the payment, you should still register for child benefit. Here are the reasons why:
National Insurance credits: If one partner stays at home to look after children, they will receive Class 3 National Insurance credits while registered for child benefit. These credits protect their entitlement to the state pension. Without them, years spent caring for children could create gaps in their National Insurance record.
Your child’s National Insurance number: Registration triggers the automatic issue of a National Insurance number for your child shortly before they turn 16. Without this, they’ll need to apply for one themselves when they start work or further education.
These benefits are valuable and shouldn’t be overlooked, even if the monetary payments aren’t relevant to your household.
You’re Still Responsible for Monitoring
Switching to the PAYE service doesn’t remove your obligation to keep track of whether you owe the charge. Your adjusted net income can change due to various factors:
- Pay rises or bonuses
- Changes to pension contributions (these reduce your adjusted net income)
- Gift Aid donations (these also reduce your adjusted net income)
- Changes in employment or self-employment
If your circumstances change and you become liable for the charge—or your liability increases—you need to notify HMRC. The new service changes how you pay, not whether you need to report your liability.
What Is Adjusted Net Income?
Adjusted net income is a crucial point that many people miss. The High Income Child Benefit Charge thresholds are based on “adjusted net income,” not your salary.
Adjusted net income is broadly:
- Your total taxable income
- Minus certain tax reliefs (mainly pension contributions and Gift Aid donations)
This means two important things:
- Your salary might be £65,000, but if you contribute £6,000 to your pension, your adjusted net income could be £59,000—below the threshold, meaning you owe nothing.
- Your salary might be £58,000, but if you have other income (perhaps from savings, investments, or a side business), your adjusted net income could be over £60,000
If you’re close to the threshold, it’s worth understanding precisely what your adjusted net income is. HMRC provides detailed guidance on how to calculate it.
Is Your Income Variable?
If your income fluctuates significantly from year to year—perhaps because you’re self-employed, work on commission, or receive variable bonuses—consider carefully whether the PAYE service is right for you.
You might be caught by the charge one year but not the next. In these situations, having the flexibility to report through self-assessment (and only pay when you actually owe the charge) might work better than adjusting your PAYE code annually.
What Should You Do Now?
If you’ve been filing tax returns solely because of the HICBC, the new service is likely to save you time and potentially money (if you’ve been paying someone to prepare your returns).
Consider these steps:
- Check your circumstances: Are you filing tax returns for any other reason? If yes, stick with self-assessment
- Understand the timing: If you’re switching mid-cycle, be prepared for potentially larger PAYE deductions
- Review your income: Is it close to the thresholds? Could pension contributions help?
- Consider opting out: If your income is well over £80,000, might it be simpler to opt out of receiving child benefit whilst remaining registered?
- Keep monitoring: Remember, you’re still responsible for checking whether you owe the charge.
Getting Help with HICBC
The new HICBC PAYE service represents a genuine simplification for many families. Everyone’s circumstances are different, though, and what works well for one household might not be suitable for another.
If you’re unsure whether to make the switch, or if you’d like help understanding your adjusted net income and potential liability, professional advice can save you both money and worry. At Maynard Johns, we can review your specific situation and help you make the right decision for your family.
For more information about the charge itself, visit GOV.UK’s HICBC guidance.
This article is based on tax rules and thresholds current as of November 2025. Tax legislation can change, and individual circumstances vary. If you’d like specific advice about your situation, please get in touch.