If your income exceeds £60,000 and you or your partner receive Child Benefit, read our helpful blog below by our Tax Assistant, Lauren Hartley, about the new system and what you need to do.
Previous payments of the High-Income Child Benefit Charge
Before this new system went live, the income threshold for the HICBC was updated in April 2024. The threshold increased from £50,000 to £60,000, meaning that individuals with an income above £60,000 are now affected.
The charge works on a sliding scale whereby for every £200 your income exceeds £60,000, 1% of your Child Benefit is charged back. If your income reaches £80,000 or above, the full Child Benefit amount is effectively repaid through the charge.
Previously, taxpayers affected by the HICBC had to either register for self-assessment or opt out of receiving Child Benefit to avoid later charges. For smaller liabilities (under £2,000), the charge could sometimes be collected via PAYE in a later year, but this process was often delayed and confusing.
The new online service removes that administrative burden, allowing the charge to be paid seamlessly through the payroll system in the same year the income arises.
How do I use the new online High-Income Child Benefit Charge system?
The new HICBC service now allows taxpayers to pay the charge automatically through PAYE in the same tax year.
To use the system, you’ll need to register with HMRC by 31st January following the relevant tax year. Before joining, you must first deregister from self-assessment if you currently use it to pay the charge.
Once registered, HMRC will update your PAYE code within 48 hours, collecting any past months owed and adjusting future payments automatically.
HMRC’s new system determines which partner in the household has the higher income and links this information with Child Benefit records. To set up the service, you’ll need to provide:
- Your National Insurance number and your partner’s National Insurance Number
- Proof of identification
- Details of any relationship changes.
Automatic updates within the new High-Income Child Benefit Charge system
Once active, your PAYE code will be updated within 48 hours to reflect any owed amounts. Future deductions will be adjusted automatically, ensuring you pay the correct charge without manual intervention.
The system will continue to update automatically for common life events, such as new or adopted children or when a child turns 16. However, you must still inform HMRC of any household or relationship changes to ensure your HICBC calculations remain accurate.
Next steps for individuals paying the High-Income Child Benefit Charge
If your individual income exceeds £60,000, it’s important to review your position under the new High-Income Child Benefit Charge system. You should:
- Check your eligibility – confirm whether the charge applies to you based on your income level and whether you claim Child Benefit.
- Register for the new HMRC service – if you no longer need to submit a self-assessment tax return, you can now arrange for the charge to be collected automatically through PAYE.
- Have your details ready – including your own and your partner’s National Insurance numbers, proof of identification, and any relationship or household change dates that may affect your entitlement.
- Inform HMRC of any updates – such as a new child, adoption, a child turning 16, or a change in relationship status. These details help keep your PAYE records accurate.
Next steps for employers for the High-Income Child Benefit Charge
For employers, the change is also worth noting. As HMRC updates PAYE systems, employees may seek advice or clarification about how the new process affects their payslips or tax codes. It’s a good idea to:
- Stay informed on the new PAYE functionality and HMRC guidance
- Ensure payroll software is up to date so that any HICBC adjustments are processed correctly
- Signpost employees to official HMRC resources or to an accountant for personalised advice. At LWA our Personal Tax Team are here to support you and your employees if needed.
Support from the Personal Tax team and Payroll Services team at LWA Accountants & Business Advisors
The introduction of HMRC’s real-time PAYE system for the High-Income Child Benefit Charge marks a positive step towards simplifying tax for higher earners. By making the process automatic and removing the need for separate self-assessment registration, this change should make life easier for many individuals.
Whilst this is the case, at LWA we understand there may be individuals and couples who are not sure how the charge is applied. So, if you feel you could benefit from advice on ensuring the correct person registers and that your household data is up to date with HMRC, please call one of our Personal Tax team at LWA, on 0161 905 1801 in our Manchester office, or 01925 830 830 for our Warrington office.
For further details from Gov.uk, visit gov.uk/child-benefit-tax-charge.