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High-income Child Benefit Charge Via PAYE

14 - 04 - 2025

From August 2025 employed taxpayers will no longer be required to complete a Self Assessment tax return to declare and pay the high-income child benefit charge (HICBC)

The HICBC is a tax charge paid by the higher earning parent which claws back up to 100% of the child benefit claimed by either parent. For the tax year 2024-25 the HICBC is payable at 1% for every £200 of adjusted net income between £60,000 and £80,000 when the charge reaches 100% of the child benefit received.

 

Currently, even where the higher earner receives all of their income from employment, they need to complete a Self Assessment tax return in order to declare and pay the HICBC. The Government has confirmed that it will no longer be necessary to complete a Self Assessment tax return purely for the purposes of the HICBC. Those individuals with no other income outside their PAYE earnings will instead need to use a new online service to report their family's child benefit payments and opt to have the HICBC collected from their payslip.

 

Taxpayers with income from other sources such as property or self-employment income will still be required to file a Self Assessment Tax Return.

 

If you would like more information on whether you should file a Self Assessment our FREE Self Assessment Questionnaire can help and guide you. Contact us for further advice on contactus@foremansllp.com or 01244 625 500.  

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Fixed Data

Assumptions

General                                                                                                                              

• The user is over 21 and subject to tax in the UK
• The user wishes to minimise their tax liability
• The user is subject to national insurance i.e.he/she is not over retirement age
• Only current tax rates and limits are applied
• No tax mitigation payments are made e.g. pension contributions
• Only 3 digit letter 'L' tax codes shown in the drop down list can be entered 
• The user does not have a turnover greater than £100,000 where fewer reliefs and or higher taxes may apply

Expenses

• All miles claimed as expenses are for business use using a personally owned car or van
• All other expenses claimed are wholly, necessarily and where appropriate exclusively for the benefit of the business

Foremans LLP Charges

• Foremans fees associated with Limited Company, Sole Trader or Umbrella are as per published rates
• Foremans current Service Costs are allowed for in all calculations.

Holiday Pay

• Holiday pay is accumulated week by week by Umbrella or Agency employer but paid out during the year

VAT

• Limited Company or Sole Trader will be VAT registered
• Limited Company or Sole Trader will take advantage of Flat rate VAT
• Flat rate applied includes the benefit of the additional 1% applicable to the first year of VAT registration

Limited Company Conditions

• One director / one shareholder in a Personal Service Company
• Director of Personal Service Company elects to vote for 100% dividend after salary, costs and expenses
• Director's salary is maximum salary to the primary threshold for NI
• The Limited Company is trading normally i.e it is not subject to IR35 and is not a Managed Service Company

NOTES

• The Current tax rates are taken from the Fixed Data Table
• The current Value Added Tax Rate is 20% and is applied to all invoices and expenses as appropriate
• The Director's Salary is fixed in relation to National Insurance thresholds. Higher Rate Taxpayers should consider the advantages and disadvantages of a larger annual salary or bonus
• Higher Rate Taxpayers may wish to consider the advantages and disadvantages of shared ownership of their business
• Users with a tax code other than three digits and letter "L" may telephone or email our Development Department to request a detailed calculation
• Generally the use of an Umbrella rather than an Agency payroll is only efficient if sufficient weekly expenses are allowable and claimed
• The expenses claimed under an Umbrella should not prevent the proper operation of National Minimum Wage