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From the 2026/27 tax year, HM Revenue and Customs (HMRC) has confirmed that households claiming Child Benefit will face an increased income threshold for the High Income Child Benefit Charge (HICBC). Individuals in families where either partner earns more than £60,000 adjusted net income will be required to repay part or all of their Child Benefit entitlement. This change means a wider group of higher-earning households must now account for additional tax liabilities, reflecting updated government policy on benefit recovery as incomes rise.
Overview of the £60,000 Income Rule
The new threshold for the HICBC is set at £60,000, as confirmed for the 2026/27 tax year. If either individual in a household receives Child Benefit and their adjusted net income exceeds this figure, a gradual repayment of the benefit is required. The policy aims to target Child Benefit payments more effectively towards lower and middle-income households, while ensuring higher earners contribute back based on their ability to pay. The threshold was raised from the previous £50,000, aligning the policy with wage inflation and ongoing fiscal considerations. According to HMRC guidance, this adjustment has been effective from the 2024/25 tax year.
How the High Income Child Benefit Charge Works
The HICBC requires those with income above £60,000 to repay 1% of their Child Benefit for every £200 earned over the threshold. Full repayment is required if adjusted net income reaches £80,000. For example, an individual earning £67,600 would be £7,600 over the threshold, leading to a 38% repayment of Child Benefit for that year. This charge applies whether the higher earner is the primary claimant or their partner, provided the benefit is being received within the household. The policy ensures that Child Benefit supports those with lower incomes, in line with wider welfare objectives.
Payment Responsibilities and Household Impact
Only households where at least one adult's income exceeds £60,000 are affected. If both partners cross this threshold, responsibility for repayment falls to the partner with the higher adjusted net income. For the purposes of this charge, a partner includes a spouse, civil partner, or someone living as a partner, as long as the couple are not permanently separated. This mechanism prevents households from avoiding the charge by splitting income between partners. HMRC guidance states the higher earner is responsible for settling the tax charge.
Adjusted Net Income and Calculating the Charge
Adjusted net income is defined by HMRC as total taxable income, minus certain allowable deductions such as pension contributions and charitable donations. Accurate calculation is essential, as errors may lead to underpayment or unexpected HMRC correspondence. The gradual nature of the charge means that, between £60,000 and £80,000 in income, only a portion of Child Benefit needs to be repaid. Once income reaches £80,000, the charge equals 100% of the Child Benefit received, effectively removing the net financial gain for high-income households.
Opting Out and Payment Methods
Families affected by the HICBC have the option to either continue receiving Child Benefit and pay the tax charge, or opt out of receiving the benefit to avoid the charge altogether. If opting in, repayment can be managed through either a PAYE tax code adjustment or via Self Assessment, depending on individual circumstances. HMRC has introduced digital services to streamline the process. In recent public communications, HMRC has reminded households of these options, especially those experiencing income increases due to pay rises in the new tax year.
Final Summary
The revised £60,000 threshold for the High Income Child Benefit Charge marks a significant shift in how Child Benefit is targeted and recovered. By increasing the income limit, HMRC aims to ensure that Child Benefit is focused on families most in need, while requiring higher earners to repay some or all of the benefit. Families must remain vigilant, especially following pay rises, as breaching the threshold can result in an unexpected tax obligation. Accurate assessment of adjusted net income and timely communication with HMRC are crucial to compliance. As government policy evolves, further adjustments may occur in response to economic conditions and public finances. Those wishing to track their benefit situation may benefit from financial planning tools, such as those offered by the Pie app, for greater oversight of Child Benefit and tax liabilities.
