How changes to Child Benefit thresholds can benefit your family

Published by Anneka Griffiths on 12 June 2024

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Changes to the High Income Child Benefit Charge (HICBC) introduced on 6 April 2024 mean that more families are now able to keep their Child Benefit payments. 

However, some parents need to act quickly to make sure they don’t lose out. 

What about the High Income Child Benefit Charge has changed?

Prior to 6 April 2024, Child Benefit payments started to be clawed back if one parent’s (or their partner’s) income exceeded £50,000.  They had to pay back 1% of the Child Benefit payments received for every £100 their adjusted net income went over the threshold.  This meant all Child Benefit had to be paid back when an income reached £60,000.  From 6 April 2024, much to the delight of many families, the starting threshold got increased to £60,000.  Moreover, the charge is clawed back at a slower rate of 1% per £200 – meaning parents don’t pay back all Child Benefit payments until an income reaches £80,000. 

Who is now eligible to claim Child Benefit?

In the past many families stopped receiving payments or didn’t make a claim for Child Benefit in the first place because income levels were too high under the old rules.  These parents may now be eligible to keep some or all of the Child Benefit payments.  However, HMRC will only backdate Child Benefit claims by up to three months.  These parents, therefore, have until 8 July 2024 to contact HMRC to make sure they do not lose out. 

If parents have not previously claimed Child Benefit and submit a new claim between 6 April 2024 and 8 July 2024, HMRC will backdate the claim by up to three months into the 2023/24 tax year.  However, a HICBC will only arise on these payments in the 2024/25 tax year if income exceeds £60,000.  Please note that this rule does not apply to parents re-starting Child Benefit payments, whereby a charge may still apply for 2023/24 if income exceeds £50,000 and the claim is backdated to before 6 April 2024. 

Not only do these new rules mean more income for more families, it also means fewer taxpayers will need to complete tax returns to report the HICBC.  The good news, however, may not last long.  Jeremy Hunt also mentioned at the recent budget that they were looking at reforming the HICBC to calculate it on a household’s income, rather than just one parent or partner with effect from 6 April 2026, which may bring more families into the HICBC charge.  But only time will tell whether the General Election will result in any further changes.   

Please visit the HMRC website for details of how to claim, or re-start, your Child Benefit payments.

If you would like to discuss how to discuss ways to reduce your adjusted net income or any other tax issues relating to the HICBC, please speak with your Kreston Reeves contact

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