If you’re earning over £60,000 a year, you might be wondering whether it’s even worth the hassle of claiming Child Benefit. After all, with the High Income Child Benefit Charge (HICBC) kicking in, it can feel like you’re just going to pay it straight back in tax. But the decision isn’t always as clear-cut as it seems. From National Insurance credits to protecting your state pension and future claims, there are still a few good reasons to consider claiming, even if you end up repaying some or all of it. Let’s break down what you need to know so you can make the best choice for your family.

How does the High Income Child Benefit Charge (HICBC) Work?

When either you or your partner earns over £60,000, the HICBC applies. This means you repay a portion of the Child Benefit through your Self-Assessment tax return. The repayment starts once your adjusted net income exceeds £60,000 and increases gradually, reaching 100% at £80,000 or more, effectively cancelling out the payments.

• If your income is between £60,000 and £80,000, you’ll receive the full Child Benefit during the year but repay a percentage based on how much your income exceeds £60,000. For every £200 above this threshold, you repay 1% of the benefit.
• If your income is over £80,000, you must repay the full amount via your tax return.
  

Because of this, some families choose not to claim to avoid the extra tax and paperwork. However, there are still good reasons to register even if you don’t take the payments.

Why Apply for Child Benefit Even If You Don’t Receive Payments?

By registering for Child Benefit but opting out of the payments, you can still access several valuable benefits:

• Your child gets a National Insurance number automatically before they turn 16, which simplifies their future tax and benefit matters.
• National insurance credits may be awarded to lower-earning or non-working partners, helping them qualify for the state pension and other contributory benefits.
• You may also become eligible for additional allowances, such as the Guardian’s Allowance, which supports families if a parent passes away.
  

Understanding Adjusted Net Income and How to Reduce It

It’s not just your gross salary that affects whether you pay the Child Benefit charge—HMRC bases the repayment on your adjusted net income. This figure accounts for taxable income after deducting things like:

• Pension contributions (both workplace and personal)
• Gift Aid donations
• Trading losses, among others
  

Increasing your pension contributions is one common way to reduce your adjusted net income and potentially lessen or avoid the Child Benefit tax charge altogether.

By applying even if you don’t intend to take the payments, you can safeguard your family’s financial interests in the long term. For dedicated and custom advice tailored to your situation, consulting a qualified accountant, such as the experts at Cangaf Ltd., is always a smart move.

What Happens When Both Partners Earn Less Than £60,000 Annually?

If both you and your partner earn less than £60,000 a year, you will receive the full Child Benefit amount without needing to repay any of it. This is the simplest scenario, with no extra tax charges involved.

What Happens When One Partner Earns Between £60,000 and £80,000?

If one partner earns more than £60,000 but less than £80,000, you’ll still receive the full Child Benefit payments throughout the year, but a portion of it will need to be repaid through an additional Income Tax charge called the High Income Child Benefit Charge (HICBC). Here’s how it works:

• You will continue to receive the full Child Benefit amount monthly (or weekly if you get weekly payments).
• The partner with the higher income will pay extra income tax to cover some of the child’s benefits.
• This is done through the Self-Assessment tax return, which calculates the amount of tax owed.
  

Important: If you are a stay-at-home parent not currently paying National Insurance, claiming Child Benefit can still be beneficial because it helps you earn National Insurance (NI) credits, which count towards your State Pension.

What Happens When One Partner Earns Over £80,000?

If one partner’s income exceeds £80,000, you still receive the full Child Benefit payments throughout the year, but the entire amount must be repaid as additional Income Tax by the higher-earning partner.

• You continue to receive Child Benefit monthly or weekly.
• The full amount is reclaimed via the Self-Assessment tax return as the High Income Child Benefit Charge.

Tax Filing Requirements

If your income exceeds £60,000 and you claim Child Benefit, you’ll need to:

• Register for Self-Assessment if you haven’t already
• File a Self-Assessment tax return annually to report and pay the HICBC

The deadline to register is October 5th, following the end of the tax year.

How to Stop Child Benefit Payments

If you prefer not to receive Child Benefit payments to avoid the tax charge and the associated Self-Assessment filing, you can opt to stop the payments altogether. This may be appealing if:

• You want to avoid extra tax payments at the end of the year.
• You want to skip the hassle of filing a Self-Assessment tax return.
• Your income is between £60,000 and £80,000, and you want to avoid out-of-pocket expenses from repaying part of the benefit.
  

To stop payments, simply notify HMRC that you wish to cancel Child Benefit payments.

If You Keep Receiving Child Benefit

If you decide to continue receiving payments despite the tax charge:

• Consider depositing the payments into a high-interest savings account to earn some interest before repaying the charge
• Ensure you’re registered for Self-Assessment to report and pay the tax charge on time.
  

Final Thoughts

Earning over £60,000 does not automatically mean you should avoid claiming Child Benefit. Even if you opt not to receive payments, registering for Child Benefit helps protect your State Pension and ensures your child receives a National Insurance number.

Before deciding, weigh the benefits of receiving payments against the administrative effort of filing Self-Assessment and paying the tax charge.

For customised advice tailored to your income, family situation, and long-term goals, it’s a good idea to speak with a qualified accountant like Cangaf Ltd. They can help you navigate the options and choose what’s best for your circumstances.