HMRC has introduced a new online service that enables taxpayers to pay the high income child benefit charge (HICBC) in real time. The aim is to reduce the number of people who need to register for self-assessment purely to settle their HICBC liability.
How the charge works
The HICBC applies when an individual, or their partner, receives child benefit and their annual income exceeds £60,000 a year. The charge gradually removes entitlement by 1 percent for every £200 of income above this threshold. Once income reaches £80,000 the charge is effectively 100 percent, meaning the child is essentially reduced to nil.
Paying HICBC through PAYE
The new HMRC service allows employees to pay the charge through PAYE provided they have no other reason to submit a self-assessment return. This excludes anyone with other taxable income such as rental profits.
A few key points to note:
You must register for the online service by 31 January following the end of the tax year in which the charge arises
Taxpayers who have not yet filed their 2024/25 return can choose to have their HICBC collected via PAYE during 2025/26
If the 2025/26 HICBC is also collected through PAYE, two separate HICBC amounts may be recovered during the same tax year
After this initial period the charge will be collected in the tax year it relates to. Anyone who has already registered for self-assessment to pay the HICBC will need to deregister before using the new online system.
What you need to sign up
Most people will need their income details, National Insurance number and their partner’s National Insurance number if they are the child benefit recipient. More complex cases require details of relationship changes during the tax year. HMRC may also ask for photo ID such as a passport or driving licence. Once registration is complete, HMRC issues a confirmation email and updates the PAYE code within 48 hours.
Forrester Boyd Partner Toni Beecroft comments: “The introduction of real time payment is a welcome step for families who only fall into self-assessment because of the HICBC. It removes unnecessary administration and should make life easier for clients who prefer their tax affairs to be handled through PAYE. That said, it’s important to check you are eligible before opting in because the new system won’t suit everyone.”
If you would like advice on whether this new service is right for you, or you need help understanding how the HICBC affects your household, our tax team is here to help. Contact us today.
All data and figures referred to in our news section are correct at the date of publishing and should not be relied upon as still current.
