House of Commons Library

The High Income Child Benefit Charge

Published Monday, December 16, 2019

The High Income Child Benefit Charge provides for Child Benefit to be clawed back through the tax system from families where the highest earner has an income in excess of £50,000 and withdrawn completely at incomes of £60,000 or more.

Jump to full report >>

The proposal to cap child benefit for those on higher incomes was first announced by the then Chancellor George Osborne in October 2010, and in the 2012 Budget the Chancellor confirmed the introduction of the High Income Child Benefit Charge (HICBC) from January 2013.[1]

The HICBC provides for Child Benefit to be clawed back through the tax system from families where the highest earner has an income in excess of £50,000 and withdrawn completely at incomes of £60,000 or more. The tax charge is equal to 1 per cent of the total Child Benefit received for every £100 earned over £50,000. For those with an annual income in excess of £60,000, the tax charge is equal to 100 per cent of Child Benefit payments received. The Charge is collected through self assessment. Individuals who are liable to pay it are required to file an annual tax return if they do not already do so.[2]

Statutory provision for the HICBC was made by s8 & Schedule 1 of the Finance Act 2012. At the time it was estimated that this change would raise £185m in 2012/13, rising to £690m in its first full year.[3]

Rather than pay the HICBC, individuals who have been awarded Child Benefit may make an election not to receive this payment. There is a basic explanation of this process on Gov.uk – as well as guidance on making this type of election. Someone can also decide to revoke this election, if say their circumstances change, and their income fell below £50,000.

The Low Incomes Tax Reform Group also publish guidance on the HICBC, which underlines the point that “Provided you have claimed child benefit, you can re-start payments at any time while you still have your underlying entitlement. So, if circumstances change, for example income changes or partner moves in or out, tell HMRC to make sure any payments that you are entitled to or tax that you need to pay are correct.”[4]

Notes : 

[1]    Budget 2012, HC 1853, March 2012 para 1.175-8; HMRC, Budget 2012: Child Benefit Income Tax Charge, March 2012.

[2]    HMRC, Issue briefing: High Income Child Benefit Charge, 3 October 2018. The policy background to the introduction of the HICBC is discussed in, Child Benefit for higher income families, Commons Briefing paper CBP6299, 16 April 2012.

[3]    Budget 2012, HC 1853, March 2012 p50 (Table 2.1 – item 2)

[4]    LITRG, Child benefit, updated 27 November 2019

Commons Briefing papers CBP-8631

Author: Antony Seely

Topics: Family benefits, Taxation

Share this page

Stay up to date

  • Subscribe to RSS feed Subscribe to Email alerts Commons Briefing papers

House of Commons Library

The House of Commons Library provides research, analysis and information services for MPs and their staff.