In this year’s Spring Budget, the Chancellor announced changes to the High Income Child Benefit Charge (HICBC). This measure has increased the adjusted net income threshold for the HICBC from £50,000 to £60,000, from 6th April 2024.
In this blog we will explain a bit about the changes so you can determine how it might impact you and your family.
HICBC History
The HICBC was introduced in 2013, requiring individuals with ‘high’ incomes to repay a portion or possibly all the Child Benefit they received in their household annually. Prior to the introduction of the HICBC, Child Benefit was a universal benefit available to all families with children, regardless of income. However, the government recognised that providing benefits to higher-income households might not be the most efficient use of public funds.
The threshold for the HICBC was decided to be based on the income of the highest earner in the household. As a result, where the higher earner in a household had an adjusted net income of more than £50,000, the amount of Child Benefit they received was clawed back each year through Self-Assessment.
The introduction of the HICBC caused some criticism and controversy, particularly from families who felt unfairly targeted or penalised for having higher incomes. However, supporters argued that it was a fairer way to allocate resources and ensure that benefits were targeted towards those who needed them most.
New Changes to HICBC
From 6th April 2024, the HICBC only applies where the higher earning parent/guardian in a household has an adjusted net income of £60,000 or more. Child Benefit is now worth £25.60 per week for an only child and £16.95 per week for each additional child (under the age of 16, or 20 if in full-time education). Therefore, individuals who earn between £50,000- £60,000, who have previously opted out of Child Benefit payments, may want to consider restarting their claims.
For those with an income between £60,000 and £80,000 it may still prove beneficial to restart Child Benefit payments. You will have to manually opt back in and restart your claim. However, you will be required to fill out a Self-Assessment Tax Return each year to calculate and pay any HICBC.
For those with income over £80,000, any Child Benefit received will have to be repaid in full at the end of each tax year via Self-Assessment. It is possible to register for Child Benefit to receive the other advantages, but to opt out of the payments.
New Child Benefit Claims
If you have not yet claimed or want to restart a claim, you can do so in the HMRC app or online. Child Benefit is automatically backdated for 3 months (or to the date of birth of the child if later).
Claiming Child Benefit provides entitlement to State Pension credits where it is claimed by a parent or guardian with little or no income and it also means your child will automatically be issued a National Insurance number when they turn 16.
For any advice or if you would like more information, please contact us on 01904 655 202, or email enquiries@hghyork.co.uk.
