Child Benefit tax charge

The High Income Child Benefit tax charge could apply to you or your partner if either of your individual taxable earnings exceeds £50,000 and you are in receipt of child benefit. The charge effectively claws back the financial benefit of receiving child benefit either by reducing or removing the benefit entirely.

If you or your partner are likely to have exceeded the £50,000 threshold for the first time during the last tax year (2018-19), then you must take appropriate action. If both you and your partner have an income that exceeds £50,000, the charge will apply to the partner with the highest income.

If you continue to receive child benefit (and earn over the relevant limits) you must pay any tax owed for 2018-19 on or before 31 January 2020. The child benefit charge is levied at the rate of 1% of the full child benefit award for each £100 of income between £50,000 and £60,000. If you or your partner’s income exceeds £60,000, the amount of the charge will equal the amount of child benefit received.

Planning note

If the High Income Child Benefit charge applies, it is usually still beneficial to claim Child Benefit for your child as it can help to protect your State Pension and will make sure your child receives a National Insurance number. However, you have the choice – to keep receiving child benefit and pay the tax charge or elect to stop receiving child benefit and not pay the charge.