Chancellor Rachel Reeves announced in the 2025 Spring Statement that HMRC is introducing a streamlined way for employees to pay the High Income Child Benefit Charge (HICBC).
What’s Changing?
Following the announcement, HMRC will launch a new digital service in summer 2025 that allows employees to pay HICBC through their PAYE tax code. This means the charge will be automatically deducted from their salary, just like income tax or National Insurance.
How Will It Work?
While full details are still to be confirmed, the process is expected to involve reporting Child Benefit payments received by you or your partner through a new online service. HMRC will then calculate any HICBC liability and adjust your tax code accordingly.
Currently, anyone liable for HICBC must register for self-assessment and complete an annual tax return, even if all their other income is taxed through PAYE. This new system will eliminate that requirement for many people.
Who Does This Affect?
The HICBC applies when one partner in a couple claims Child Benefit and either partner has an adjusted net income over £60,000. Adjusted net income is your total income after deducting pension contributions, Gift Aid payments, and certain other allowances.
Importantly, it’s always the higher earner who pays the charge, regardless of who actually claims the Child Benefit.
If you’re currently paying HICBC through self-assessment, this change could significantly simplify your tax affairs.
For more information about how these changes might affect you, please get in touch with our team. Contact us on 01905 777600 or email hello@ormerodrutter.co.uk
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