The adjustments to the High Income Child Benefit Charge (HICBC), as outlined in the Spring Budget, have now been enshrined in the latest Finance Bill and are slated to come into effect from April 6, 2024. The upsurge in the threshold for the tax charge brings some positive news, albeit there have been calls for its complete removal. HICBC aims to recoup child benefit where the higher earner in a partnership possesses adjusted income surpassing £60,000 (£50,000 up to 2023/24). The clawback rate will stand at 1% for every £200 of net income exceeding £60,000, with full recovery of child benefit applicable when net income reaches £80,000 or higher.

In lieu of paying the tax charge, many couples have opted not to claim child benefit in recent years. An estimated 180,000 eligible couples for child benefit are anticipated to no longer fall within the purview of HICBC, and should consider resuming their claims from April 6, 2024. This can be facilitated by utilizing an online claim form.

Example:

Fred and Wilma, eligible for child benefit for their two children, find Fred as the higher earner with an income of £68,000 in 2023/24, projected to rise to £70,000 in 2024/25. In 2023/24, the HICBC would have constituted 100% of the child benefit received. For 2024/25, their child benefit amounts to £25.60 for the first child and £16.95 for each additional child, totaling £42.55 weekly or £2,212.60 annually.

Based on Fred’s £70,000 net income, a 50% HICBC for 2024/25 would equate to £1,106.30.