Answers · UK 2025/26
What counts as adjusted net income for the High Income Child Benefit Charge?
Adjusted net income for the High Income Child Benefit Charge is your total taxable income (salary, self-employment profit, rental income, savings interest, dividends) minus pension contributions paid via net pay or personal contributions grossed up, and minus Gift Aid donations grossed up. It is not simply your gross salary, so pension contributions and charitable giving can reduce it and cut or eliminate the charge.
Full answer
The High Income Child Benefit Charge (HICBC) starts to claw back Child Benefit once your adjusted net income exceeds £60,000 for 2026/27, and removes it entirely once adjusted net income reaches £80,000 -- but "adjusted net income" is a specific calculation, not simply your salary, and understanding it can meaningfully change whether or how much of the charge applies to you. Start with your total taxable income from all sources: employment income, self-employment profits, rental income, savings interest above any tax-free allowances, dividends, and most pension income. From this, deduct the gross value of any pension contributions made via relief-at-source (grossing up the amount you actually paid by adding back the basic rate tax relief automatically added to your pension), and any personal pension contributions where relief has not already been given at source. Also deduct the gross value of Gift Aid donations, grossed up in the same way. The result is your adjusted net income -- crucially, pension contributions made via a workplace salary sacrifice arrangement already reduce your gross salary before it is even counted as income, so they do not need a separate deduction in this calculation, since your salary is already lower. For example, someone with a £68,000 salary who makes a £8,000 gross personal pension contribution (grossing up a £6,400 net payment) would have an adjusted net income of £60,000, taking them below the HICBC threshold entirely and avoiding the charge, whereas without the pension contribution they would have faced a partial clawback. This is why increasing pension contributions is one of the most common and effective strategies for managing the High Income Child Benefit Charge.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.