More than 100,000 families across the UK are set to be freed from the administrative burden of the self-assessment tax system, thanks to a significant rule change by HM Revenue and Customs (HMRC).
What is the High Income Child Benefit Charge?
The High Income Child Benefit Charge (HICBC) is a tax charge that applies when an individual claiming Child Benefit, or their partner, has an income over a certain threshold. For the tax year 2024/25, this threshold is £60,000. For previous years up to 2023/24, the threshold was £50,000.
The charge applies regardless of whether the child living with the claimant is their own, as long as they contribute equally to the child's upkeep. Before a key change in September 2025, affected families had to register for self-assessment and manually calculate and pay this charge each year.
The New Payment System Explained
Under the new system, which is now being rolled out, many higher-earning parents will have the HICBC collected directly from their salary or pension through the Pay As You Earn (PAYE) system. This means their tax code will be adjusted to recover the charge automatically, aligning the process with how most people pay income tax.
According to Freedom of Information figures obtained by financial planners Quilter, 102,000 taxpayers in the 2021/22 financial year would have been eligible for this automatic collection. This number increased to 126,000 in the 2022/23 tax year, reflecting how more households have been drawn into paying the charge as incomes have risen.
A Welcome End to 'Frustrating' Paperwork
The shift is expected to remove a major point of frustration for thousands of families. Shaun Moore, a tax and financial planning expert at Quilter, welcomed the change.
"For years a large number of higher earning parents have found themselves dragged into the self assessment system purely to repay part of their Child Benefit, even though their income was already taxed through PAYE," he said. "Allowing the charge to be collected through a tax code brings the process back in line with how most people expect their taxes to work and will remove a great deal of frustration."
The reform effectively means that an estimated 100,000 households will no longer face the annual self-assessment process solely to settle the HICBC, simplifying their financial admin and reducing the risk of penalties for missed deadlines.
