Child Benefit tax charge: how to keep yours at any income
Child Benefit is worth up to £1,407 per year for your first child, plus £931 for each additional child. Most families claim it automatically and never think about it again.
But once the highest earner in your household crosses £60,000, HMRC starts clawing it back through a tax charge called the High Income Child Benefit Charge (HICBC). By £80,000 it's gone entirely. Most people don't realise that with the right approach, you can keep all of it — at any income level.
The Child Benefit charge is based on your adjusted net income — which includes pension contributions as a deduction. A pension contribution that brings your income below £60,000 eliminates the charge entirely. This is one of the most financially significant actions available to families earning in the £60,000–£100,000 range.
How the charge works
The High Income Child Benefit Charge was introduced in 2013. It applies when the highest earner in a household has an "adjusted net income" above £60,000. The charge scales up from £60,000 to £80,000, at which point it equals the full Child Benefit amount.
| Adjusted net income | HICBC charge | Child Benefit retained |
|---|---|---|
| Under £60,000 | £0 | 100% |
| £65,000 | 25% of Child Benefit | 75% |
| £70,000 | 50% of Child Benefit | 50% |
| £75,000 | 75% of Child Benefit | 25% |
| £80,000+ | 100% — full clawback | £0 effectively |
The charge is calculated on your adjusted net income — your gross income minus personal pension contributions and Gift Aid payments. Crucially, it's only the income of the highest earner that matters, not household income combined.
What "adjusted net income" actually means
This is the number that determines whether the charge applies — and it's lower than your gross salary if you make pension contributions.
Adjusted net income = gross income − personal pension contributions − Gift Aid payments
If you earn £68,000 and contribute £10,000 to a pension, your adjusted net income is £58,000 — below the threshold. The HICBC does not apply. You keep all your Child Benefit and you've also boosted your pension by £10,000 with full tax relief.
If your pension contributions go through salary sacrifice, your gross pay is already reduced before the calculation. A salary of £68,000 with £10,000 sacrificed means your employer reports your pay as £58,000 — so your adjusted net income is already £58,000 without any further deduction needed. The effect is the same but the mechanism differs.
The numbers: what you stand to keep
Child Benefit rates for 2026/27 are £27.05 per week for the first child (£1,407/year) and £17.90 per week for each additional child (£931/year).
The taper zone between £60,000 and £80,000 creates some of the highest effective marginal tax rates in the UK tax system. A 40% taxpayer with two children earning £65,000 faces an effective marginal rate well above 50% on income in that band — because every extra pound of income triggers both income tax and a proportional HICBC clawback.
James and Claire were receiving Child Benefit of £2,337/year. At the end of the tax year, James received a Self Assessment bill for £1,636 — the HICBC. They hadn't known about the charge. After a confusing couple of years, they opted out of receiving Child Benefit to avoid the admin hassle, losing £2,337/year in the process.
When they spoke to an accountant, they realised James's employer offered salary sacrifice. Increasing his pension contributions by £14,000/year through salary sacrifice would bring his adjusted net income to £60,000, eliminating the charge entirely. The net cost after tax and NI relief was approximately £7,500/year — in exchange for £14,000 more pension and £2,337/year in Child Benefit retained.
They re-registered for Child Benefit immediately — even if you've opted out, you can re-register at any time.
The pension fix: step by step
The mechanism is simple. You need to calculate how much pension contribution is required to bring your adjusted net income below £60,000, then make that contribution — either personally or via salary sacrifice.
- Calculate your adjusted net income. Start with your gross income. Deduct any existing pension contributions (personal, not salary sacrifice). Deduct any Gift Aid payments.
- Find the gap. How far above £60,000 are you? That's the amount you need to contribute to eliminate the charge entirely.
- Check salary sacrifice vs personal contributions. If your employer offers salary sacrifice, this is usually more efficient because it also saves National Insurance. Personal contributions to a relief at source pension also work — they reduce your adjusted net income for HICBC purposes.
- Consider partial reduction. If eliminating the charge entirely requires a contribution that feels too large, even reducing your income to £70,000 halves the charge. Any reduction helps.
Many families opt out of receiving Child Benefit because completing a Self Assessment return feels like hassle. This is usually a mistake. Claiming Child Benefit (even if you pay it back via HICBC) protects National Insurance credits for the lower-earning partner — which count toward the State Pension. Opt out and those credits stop accruing. Re-register instead, and deal with the tax return.
Self Assessment and the HICBC
If you or your partner are liable for the HICBC, the higher earner must complete a Self Assessment tax return each year and pay the charge. HMRC does not collect it through PAYE automatically.
If you've been liable but haven't been filing returns, HMRC can look back up to four years. It's better to register voluntarily than to wait for HMRC to contact you — penalties are lower for voluntary disclosure.
If you are in Scotland
Child Benefit itself works identically in Scotland — same rates, same HICBC rules, same pension fix. But Scotland has two additional payments that most UK personal finance sites never mention, because they simply don't exist in England or Wales.
Scottish Child Payment
The Scottish Child Payment is a separate, additional payment administered by Social Security Scotland — not HMRC. It is paid on top of Child Benefit, not instead of it. Many Scottish families miss out because they assume they are the same thing.
| Detail | Scottish Child Payment |
|---|---|
| Amount (2025/26) | £27.15 per week, per child |
| Amount (from April 2026) | £28.20 per week, per child |
| Age limit | Under 16 |
| Two-child limit | Does not apply — paid for every eligible child |
| Who qualifies | Families in Scotland receiving Universal Credit, Pension Credit, or income-related ESA |
| Paid by | Social Security Scotland (not HMRC) |
| How to apply | Online at mygov.scot or call 0800 182 2222 |
A family with two children under 16 receiving UC in Scotland is entitled to £54.30 per week (£2,824/year) from Scottish Child Payment — on top of their Child Benefit. This is one of the most significant financial differences between Scotland and the rest of the UK for families on low to middle incomes, and it is widely underclaimed.
Two Child Limit Payment (from April 2026)
From April 2026, Scotland is introducing a further top-up payment specifically for families affected by the UK Government's two-child limit in Universal Credit. Where UC provides no child element for a third or subsequent child, Social Security Scotland will pay a mitigation amount directly. This has no equivalent in England or Wales. The Scottish Government estimates it will keep 20,000 additional children out of relative poverty in 2026–27.
Three actions to take now
- Re-register for Child Benefit if you've opted out. Even if the charge applies, staying registered protects NI credits for the lower-earning partner. You can re-register at any time via HMRC's website.
- Calculate your adjusted net income. Gross income minus existing pension contributions. If you're above £60,000, work out the pension contribution needed to get below it.
- Ask HR about salary sacrifice. If your employer offers it, salary sacrifice is the most efficient mechanism — it saves income tax and National Insurance on the contribution. For basic rate taxpayers in the taper zone, the combination of income tax, NI, and HICBC relief can make salary sacrifice extraordinarily efficient.