High Income Child Benefit Tax Charge
The question
To ask the Chancellor of the Exchequer, what comparative assessment her Department has made of the impact of the High Income Child Benefit Charge threshold on single-earner and two-earner households.
Answered by Dan Tomlinson
The High Income Child Benefit Charge (HICBC) applies to Child Benefit recipients, or their partner, who has an adjusted net income of £60,000 or more. An individual’s adjusted net income is their total taxable income before any Personal Allowances and less certain tax reliefs.
The HICBC threshold was increased to £60,000 in April 2024, which took 170,000 families out of paying this tax charge in 2024/25. The point at which Child Benefit is fully withdrawn was also raised to £80,000. The HICBC threshold was £50,000 prior to 6 April 2024.
The adjusted net income threshold of £60,000 ensures the Government supports the majority of Child Benefit claimants, whilst keeping welfare expenditure sustainable.
HICBC is calculated on an individual rather than a household basis, in line with other income tax policy. In the Autumn Budget 2024, the Chancellor announced that there are no current plans to change to a system where HICBC is calculated on a household income basis, as it is estimated this would cost up to £1.4 billion or would require some families currently in receipt of Child Benefit and outside the scope of the tax charge to lose out.
As with all elements of tax policy the Government keeps HICBC under review as part of its Budget process.
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