Register for Child Benefit even if the HICBC applies

If you are responsible for bringing up a child who is under the age of 16, or under the age of 20 where they remain in approved education or training (such as A levels but not education at an advanced level, such as university), you can claim child benefit. Only one person can receive child benefit in respect of a particular child. A High Income Child Benefit Charge (HICBC) can be applicable in certain circumstances.

For 2021/22, child benefit is payable at the rate of £21.15 for the eldest or only child. For any additional children, you will be awarded £14 per week. You will receive this payment every four weeks.

High Income Child Benefit Charge (HICBC)

The HICBC applies to claw back child benefit paid where you (the claimant), or your partner if you have one, have ‘adjusted net income’ of £50,000 or more. This is income before personal allowances and deductions for items such as Gift Aid.

The HICBC works by clawing back 1% of the child benefit paid for every £100 by which adjusted net income exceeds £50,000. Where adjusted net income exceeds £60,000, the HICBC is equal to 100% of the child benefit paid in the tax year.

Who pays the tax?

Where both you and your partner have adjusted net income in excess of £50,000, the HICBC is payable by the person who has the highest adjusted net income. If only one of you have adjusted net income in excess of £50,000, then that person is responsible for paying the tax. This means that the person on whom liability for the HICBC falls is not necessarily the same person who has received the child benefit.

For the purposes of the charge, a person is a partner of the claimant if they are married to the claimant or in a civil partnership with the claimant and not permanently separated, or someone who lives with the claimant as if they were married or in a civil partnership. The charge will apply regardless of whether the claimant’s partner is biologically related to the child in respect of whom the child benefit is paid, or is responsible for that child.

Elect not to receive child benefit

To eliminate the need to repay child benefit received in the form of the HICBC, where the charge is equal to 100% of the child benefit, it may be easier if you elect for this not to be paid. Where child benefit is already being paid, you can opt out of payments by completing the online form or contacting HMRC by post or by phone.

Register to benefit from National Insurance credits

Where HICBC applies but you would not otherwise pay sufficient National Insurance contributions for the year to be a qualifying year for state benefit purposes (for example, where you do not work or have low earnings and the HICBC is payable by your partner), it is important that you register for child benefit in order to receive National Insurance credits to preserve your child’s state pension entitlement. These are available where a person is registered for child benefit in respect of a child under 12.

At the time of registering, you can elect for your child benefit not to be paid, where this is preferable to receiving it and paying the same amount in the form of the HICBC.

Further queries

For anyone based in Northern Ireland, you can contact us directly on 028 9032 9255 for individual queries or by email info@arthurboyd.co.uk.

To see the full range of accountancy and insolvency services we offer, please check out our website.