Millions of parents risk losing hundreds of pounds in HMRC benefits due to a hidden charge linked to the High Income Child Benefit Charge. Families with incomes between £60,000 and £80,000 are urged to check if they owe repayments on their Child Benefit.
How the Charge Works
The charge applies when either parent or partner receiving Child Benefit has an adjusted net income above £60,000, following a threshold increase from the 2024-25 tax year. Andy Wood, a tax expert at Tax Barrister UK, explained: "Many families do not realise that Child Benefit can become repayable once one parent or partner earns over £60,000."
For example, a parent with an adjusted net income of £67,600 sits £7,600 above the limit. Dividing this excess by £200 gives 38, meaning 38 per cent of their Child Benefit must be repaid. Once earnings reach £80,000, the full amount becomes repayable.
Common Misconceptions
Mr Wood emphasised: "The charge is based on individual income rather than household income, which can catch people out. A couple earning £59,000 each may not face the charge, while a household with one earner on £65,000 could." He added that adjusted net income is not always the same as salary, as it can include savings interest, dividends, and other taxable income.
Many parents assume they should simply cancel Child Benefit once they cross the threshold, but Mr Wood warned that this is not always the best option. Child Benefit is worth £27.05 a week (£1,406.60 a year) for the eldest or only child and £17.90 a week for each additional child. Last year, 874,000 parents extended their claim, with more than half doing so online or through the HMRC app.
Myrtle Lloyd, HMRC’s Chief Customer Officer, said: "Child Benefit is a real financial boost for families, so if your teenager already knows they’re staying in education or training after their GCSEs or National 5s, you don’t need to wait for our letter."
