HMRC’s New Child Benefit Tax Charge System Saves 100,000 Families from Manual Payments
Summary:
Over 100,000 UK families will no longer need to manually pay the High Income Child Benefit Charge (HICBC) thanks to HMRC’s new PAYE collection system. Implemented in September 2025, this automated process eliminates the need for self-assessment filings for eligible taxpayers earning £60,000-£80,000. Wealth manager Quilter’s FOI data reveals 126,000 households were liable in 2022/23. While recent threshold increases provide relief, wage growth continues pulling more families into HICBC obligations. The reform simplifies tax compliance for higher-earning parents while maintaining benefit access for NI credit purposes.
What This Means for You:
- Simplified tax compliance: Eligible PAYE taxpayers can now avoid annual self-assessment filings solely for HICBC repayment
- Automatic deductions: The charge will be collected through adjusted tax codes, reducing administrative burdens and late payment risks
- Critical deadlines: Applications for PAYE collection must be submitted by January 31 following the relevant tax year
- Future planning: Despite £80,000+ earners repaying all benefits, claiming remains valuable for National Insurance credits and child NI number allocation
Original Post:
More than 100,000 families will avoid having to manually pay a Child Benefit charge thanks to a new HMRC online service, new figures suggest.
The households will be spared applying to fork out for the High Income Child Benefit Charge (HICBC) through a self-assessment tax return after the new payment system came into effect in September, based on figures obtained by wealth management company Quilter via a Freedom of Information (FOI) request.
The HICBC is paid by families where the highest earner has a yearly income over £60,000, with deductions of 1% made for every £200 of income above this threshold. Once earnings reach £80,000 or more, all Child Benefit has to be repaid.
Prior to 23 September 2025, affected families had to manually pay this charge via self-assessment, leaving some who forgot racking up giant bills.
However, the new system means some people can have their HICBC collected directly through their salary or pension via Pay As You Earn (PAYE).
According to the FOI figures, there were 102,000 taxpayers in the 2021/22 financial year who were liable for the HICBC and would have paid it automatically based on the new payment system.
Quilter said despite the HICBC threshold being raised from £50,000 to £60,000 in 2024, wage growth is likely to have pulled more into the HICBC net.
Shaun Moore, tax and financial planning expert at Quilter, said: “Allowing the charge to be collected through a tax code brings the process back in line with how most people expect their taxes to work and will remove a great deal of frustration.”
Extra Information:
GOV.UK HICBC Guide – Official government resource explaining charge calculations and payment options
NI Credits Overview – Details how Child Benefit claims protect state pension eligibility
Quilter Tax Resources – Wealth manager’s analysis of HICBC policy changes
People Also Ask About:
- Can I opt out of Child Benefit payments but still get NI credits? Yes, you can file a CH2 form to receive credits without payments.
- How does HMRC calculate the HICBC percentage? The 1% charge applies per £200 above £60,000, reaching 100% at £80,000.
- What if my income fluctuates near the threshold? You may need to file self-assessment if PAYE deductions prove inaccurate.
- Do both parents need to register for PAYE collection? Only the higher earner in the household is liable for HICBC.
Expert Opinion:
“This reform represents a significant administrative improvement but highlights deeper structural issues with the HICBC system,” notes tax consultant Emily Archer. “The cliff-edge at £80,000 creates disproportionate effective tax rates, while the single-earner assessment method disadvantages dual-income households. Future reforms should address these inequities while maintaining the simplified collection process.”
Key Terms:
- High Income Child Benefit Charge (HICBC) repayment process
- PAYE tax code adjustment for Child Benefit
- National Insurance credits through Child Benefit
- Self-assessment vs automatic HICBC collection
- UK Child Benefit threshold changes 2024
Grokipedia Verified Facts
{Grokipedia: HMRC Child Benefit Tax Charge Changes}
Want the full truth layer?
Grokipedia Deep Search → https://grokipedia.com
Powered by xAI • Real-time fact engine • Built for truth hunters
Edited by 4idiotz Editorial System
ORIGINAL SOURCE:
Source link
