HM Revenue & Customs (HMRC) has confirmed that Child Benefit claimants with a taxable income exceeding £60,000 a year could face a Child Benefit charge. The charge applies to individuals earning over the threshold, regardless of joint household income.
Who is affected by the Child Benefit charge
The charge applies if either you or your partner has a taxable income above £60,000 as an individual. Joint income is not considered – a couple where both partners earn £59,000 each would not be affected. It also does not matter which partner claims Child Benefit, or whether the children are biologically related to the claimant.
If you live with someone – whether married, civil partners, or co-habiting – who receives Child Benefit, and your income exceeds £60,000, the charge applies to that benefit. The rules apply equally to step-children and other non-biological children in the household.
How the £200 rule works
There is a key £200 rule to understand. The charge is calculated as 1% of the Child Benefit received for every £200 of income above the £60,000 threshold. For example, an income of £70,000 would trigger a charge equal to 50% of the Child Benefit received.
For those earning between £60,000 and £80,000, the charge will be less than the total Child Benefit received. However, if income exceeds £80,000, the charge becomes equal to the full value of the Child Benefit – effectively repaying the entire amount.
Income definition and self-assessment
The income definition used for the Child Benefit charge is identical to the definition used in the broader tax system. Tax experts advise that if you are unsure whether your taxable income exceeds £60,000, the safest approach is to register for self-assessment.
If your income for the full tax year turns out to be above £60,000, you will have a Child Benefit charge to pay and will need to complete the self-assessment form – a longer process than simply registering. If your income is below £60,000, no charge applies and you will not need to submit a self-assessment unless required for other reasons.
