In recent months there have been two important announcements impacting those affected by the High Income Child Benefit Charge (HICBC). The HICBC is a claw back through the tax system of the child benefit received where one or more earners in the household has a total income of £50,000 or more. With an individual income of £60,000 or more, the HICBC reclaims all the child benefit received.
National Insurance Credit top-up
The belief is that, since 2013 when the HICBC was introduced, many individuals in households affected by it may have just not registered for child benefit.
By not registering, they may have missed important credits towards their state pension. Parents or guardians of a child aged under 12 who have registered for child benefit (even if they have then elected not to receive it because of the HICBC) will automatically get an annual credit towards their State Pension entitlement.
From April 2026 those affected will be able to claim a top-up credit to fill these gaps, dating back to the introduction of the HICBC in 2013. Going forwards, applications will need to be made within six years of the year when there has been a potential gap.
Spring Budget 2024
It has long been recognised that there is an unfairness in the HICBC system because it affects households where there is one earner with income of £50,000 or more but it does not affect households where there are, say two earners, each with income of £49,000.
To address this, the Chancellor announced in his Spring Budget in March that, from April 2026, the HICBC will be based on household income, as opposed to an individual’s income. This is a logistical challenge for HMRC (HM Revenue & Customs), as they do not currently collect data on household income, and we await further details on how this will be achieved.
As an interim measure, the Budget announcement raised the threshold at which the HICBC starts to apply from £50,000 to £60,000 and halved the rate, so that child benefit would only be fully clawed back when an individual’s income exceeds £80,000. This change is effective from 6 April 2024.
If you think you may be affected by these changes, or if you think you may have undeclared HICBC liabilities in past years, please call 0333 123 7171 or get in touch with your usual BHP contact.
