Can I pay the High Income Child Benefit Charge through PAYE instead of Self Assessment?

Full answer

The High Income Child Benefit Charge (HICBC) claws back Child Benefit when the higher earner in a household has adjusted net income above a set threshold. The charge increases gradually across an income band and fully cancels out the benefit once income reaches the top of that band. Historically the only way to pay was through Self Assessment, which forced many otherwise-PAYE employees to file a tax return purely for this charge. The PAYE option changes that. Employed taxpayers can now report their liability through an HMRC digital service, and the charge is collected through an adjustment to their tax code so it comes out of monthly pay automatically. This removes the need to register for and file Self Assessment solely for the HICBC. You can still choose Self Assessment if you have other reasons to file or prefer to settle the charge as a lump sum after the tax year ends. Who it affects: any employee whose own, or whose partner's, adjusted net income falls in the HICBC band while the household receives Child Benefit. Only the higher earner pays the charge, regardless of who actually claims the benefit. A key planning point: the charge is based on adjusted net income, which is income after deducting things like pension contributions made from net pay and Gift Aid donations grossed up. So increasing a salary-sacrifice pension contribution, or making Gift Aid gifts, can lower adjusted net income and reduce or remove the charge entirely. Because the precise HICBC threshold band is not in this rate card, confirm the current figures on gov.uk before calculating. To see how pension contributions reduce your adjusted net income and your wider tax position, use a pension or income tax calculator.

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