HMRC is taking back cash from parents over a £200 Child Benefit rule. If you or your partner earn more than £60,000 a year, you’ll have to pay some of your Child Benefit back. If you or your partner earn £80,000 or more, you’ll have to pay all of it back.
You’ll pay back 1% of your Child Benefit for every £200 you earn over the threshold. HMRC, the Labour Party government's tax arm, gives an example on its website.
It says: "Your adjusted net income is £67,600 in tax year 2024 to 2025. This is £7,600 over the £60,000 threshold. As 7,600 divided by 200 is 38, you’ll pay back 38% of your Child Benefit."
If you or your partner earned more than £50,000 a year, you’ll have to pay some of your Child Benefit back. If you or your partner earned £60,000 or more, you’ll have to pay all of it back. You’ll pay back 1% of your Child Benefit for every £100 you earn over the threshold.
It adds: "Your adjusted net income is £56,700 for tax year 2023 to 2024. This is £6,700 over the £50,000 threshold. As 6,700 divided by 100 is 67, you’ll pay back 67% of your Child Benefit."
If your adjusted net income is over the threshold and so is your partner’s, then whoever has the higher income is responsible for paying the tax charge. ‘Partner’ means someone you’re not permanently separated from who you’re married to, in a civil partnership with or living with as if you were.
You can choose to either get Child Benefit payments and pay the tax charge or opt out of getting payments and not pay the tax charge. There are two ways to pay the tax charge: you can either pay the tax charge through PAYE or pay the tax charge through Self Assessment.
However, you must pay the tax charge through Self Assessment if you need to send a tax return for another reason, for example because you’re self-employed or earn interest on savings or investments or it’s later than 31 January in the year after the tax year you need to pay for, you must pay the tax charge through Self Assessment.
HMRC says: "You need to pay the tax charge for the tax year starting on 6 April 2025. If it’s after 31 January 2027, you must make the payment through Self Assessment."
If you’ve previously completed a Self Assessment tax return to pay the tax charge and not for any other reason, you can choose to pay it through PAYE instead.
