This Content Was Last Updated on January 9, 2016 by


The High Income Child Benefit Charge comes in from 1 January 2013.

Its disappointing, and not best thought out, to introduce this in the middle of a tax year.  Its also a disappointing set back to independent taxation in so far as it looks at incomes of highest wage in the house.  Sometimes it would be nice if our politicians ignored sound bites  and took time to make sure new policies are fit for purpose, rather than knee jerk!

At its simplest the charge applies:

(a) where there has been a claim to Child Benefit

(b) to the highest income in a joint household (married, unmarried or civil partnership); or to a individual who is a single parent

(c) where the highest income exceeds £50,000

This means:

(a) in a single parent household it cuts in at £50,000 income

(b) in a two parent household where only one parent has a income it cuts in at £50,000

(c) in a two parent household where both parents have income, in theory joint household income could be as high as £99,998 without a charge – although in reality it would cut in lower unless the incomes were matched.

Obviously the effect of (c) means that structuring joint assets will now be of more importance.  Eg historically if you had a joint income stream, from a investment or business, producing, say £90,000 pa, the main concern would be to make sure both partners used their basic rate tax allowance, but you wouldn’t worry if one person had income of £50,000 and the other £40,000; now, all other things being equal, you would prefer £45,000 for each.  Obviously there is only a small band for adjustments of this nature.

The charge itself is 1% of Child Benefit received for each £100 of income over £50,000.

EG: if the highest income was £54,000, and child benefit received was £1,752 (which is the current annualised rate for two children)  then the charge would be £700.80 being £17.52 x 40.

The effect of the tapering is

(a) to clawback the Child Benefit progressively between £50,000 and £60,000 of income.

(b) to create a higher marginal tax rate in this zone – the rate depends on the amount of Child Benefit to claw back, but the marginal rate becomes 51% for a single child or 18% for two children (this is based on 40% Higher Rate tax plus the HICBC)

Specific rules cater for households coming together and separating in year, claims to Child Benefit that start or finish in year, and to situations of guardians / absent parents.  These are beyond the scope of this briefing note.

The main planning point for clients is ensuring that joint income is allocated as efficiently as possible.  As always this needs to be a rounded consideration, taking into account tax, NI, asset ownership, estate planning and other variables.


To help us to monitor and advise you on HICBC issues, we are asking clients to complete and email to us a brief questionnaire:

child benefit questionnaire (pdf)