Child Benefit
Official Definition
According to HMRC, Child Benefit is a tax-free payment to help with the cost of raising children. It's £25.60 per week for your first child and £16.95 per week for each additional child.
What It Is (Plain English)
Child Benefit is money the government pays you for each child under 16 (or under 20 if they're in approved education or training). Think of it as £1,331 per year for your first child and £881 per year for each additional child - a meaningful sum for most families.
The catch? If you or your partner earn over £60,000, you have to pay some or all of it back through the High Income Child Benefit Charge. Between £60,000 and £80,000, you gradually lose it. Above £80,000, you repay every penny.
- First child: £25.60/week = £1,331/year
- Other children: £16.95/week = £881/year each
- Start of taper: £60,000 income
- Full repayment: £80,000+ income
- Counts: The highest earner in your household
The High Income Child Benefit Charge (HICBC)
This is the tax charge that claws back Child Benefit when income gets too high. HMRC looks at your adjusted net income (roughly your gross salary minus pension contributions and charity donations). If that's over £60,000, you pay back 1% of the Child Benefit for every £200 over the threshold.
Important: It's based on the highest earner in your household, not combined income. So if you earn £40,000 and your partner earns £70,000, the charge applies to your partner.
How the Charge Works
- Child Benefit received: £1,331/year
- Income over £60,000: £5,000
- Charge: £5,000 ÷ £200 = 25 "steps"
- Each step = 1% of benefit
- Repay: 25% × £1,331 = £333
- Keep: £998
- Child Benefit received: £1,331 + £881 = £2,212/year
- Income over £60,000: £15,000
- Charge: £15,000 ÷ £200 = 75 steps
- But capped at 100%
- Repay: 75% × £2,212 = £1,659
- Keep: £553
- Child Benefit received: £1,331/year
- Income over £60,000: £25,000
- Charge: 100% (capped)
- Repay: £1,331
- Keep: £0
Why You Might Still Claim (Even If You Repay It All)
Here's something many people don't know: claiming Child Benefit protects your State Pension, even if you have to repay the money. Here's why:
- The person claiming gets National Insurance credits
- These credits count toward your State Pension
- Especially important if you're not working or earning under the NI threshold
- Worth around £300,000 in lifetime State Pension benefits
So even if you earn £100,000 and repay every penny of Child Benefit, it's still worth claiming for the NI credits if your partner isn't working or has gaps in their NI record.
You can claim but elect not to receive payments. This gives you the NI credits without the admin of repaying. Tick the box on the claim form that says "I don't want to receive Child Benefit payments".
How to Avoid or Reduce the Charge
The charge is based on adjusted net income, which you can reduce through:
1. Pension Contributions
The most effective way. Every £1 you pay into a pension reduces your adjusted income by £1. If you're at £62,000 and pay £2,000 into your pension, you drop to £60,000 and avoid the charge entirely.
Salary sacrifice works even better because it also saves you NI. Relief at Source pensions need to be "grossed up" but still count.
2. Gift Aid Donations
Charitable donations also reduce adjusted net income. If you were planning to give to charity anyway, doing it before the tax year ends can save you the Child Benefit charge.
3. Trading Allowance (if self-employed)
If you have self-employment income, you might be able to claim the £1,000 trading allowance which reduces taxable income.
4. Salary Timing
If your income fluctuates (bonuses, commissions), you might be able to time when you receive it to stay under £60,000 in high Child Benefit years (when kids are young).
Who Pays the Charge?
The highest earner in the household must declare it on a Self Assessment tax return and pay the charge. This means:
- You'll need to register for Self Assessment if you're not already
- The deadline is 31 January after the tax year ends
- HMRC can charge penalties if you don't declare it
- You can pay the charge monthly through your tax code instead of a lump sum
Common Questions (FAQ)
What if we both earn £50,000 - do we pay the charge?
No! The charge only applies if one person earns over £60,000. Combined income doesn't matter. Two people earning £50,000 each pay nothing.
What counts as "living together" for partner income?
If you're married, in a civil partnership, or living together as a couple (same or opposite sex). You don't have to be married. If you live apart (even if in a relationship), only the claimant's income counts.
Can I just stop claiming to avoid the admin?
You can, but you'll lose NI credits which could cost you thousands in State Pension. Better to claim but elect not to receive payments - you get credits without the repayment admin.
What if my income goes up mid-year?
The charge is based on the whole tax year's income. If you get a pay rise or bonus that pushes you over £60,000, you'll pay the charge on the whole year's benefit, not just from the date your income increased.
I earn £62,000 - is it worth claiming?
Yes! You'll only repay 10% (£133 for one child). You keep £1,198. And you protect your partner's State Pension. Between £60k-£80k it's almost always worth claiming.
Can I backdate my claim?
Yes, up to 3 months. So if your child was born 6 months ago but you've just found out about Child Benefit, you can only claim back 3 months. Claim as soon as your child is born or adopted.
What if I'm already doing Self Assessment for other reasons?
You just add the Child Benefit charge to your existing tax return. It's one extra form (SA410) and HMRC will calculate the charge for you based on your income and number of children.
How the Calculator Helps
Our calculator automatically identifies when your income crosses the £60,000 threshold and you start having to repay Child Benefit. It shows you:
- Exactly how much you'll need to repay based on your income
- Whether pension contributions could bring you back under £60,000
- The optimal amount to contribute to avoid or reduce the charge
- Your net position after accounting for both the charge and tax relief
Enter your income and number of children in the calculator, and it will flag if you're in the Child Benefit taper range and suggest strategies to help you keep more of the benefit.