📌 What is HICBC?
HICBC, as it is known for short, is where if you or your partner earn an individual income of over £60,000 for the 2024/25 tax year and one of you claims Child Benefit, you may have to pay some or all of it back. Income in this case is defined as your “adjusted net income”, which is your total taxable income before any allowances or reliefs such as gift aid.
📊 How Does It Work?
For incomes above £80,000, the tax charge equals the full amount of the Child Benefit received.
For incomes between £60,000 and £80,000, HICBC is charged at 1% for every £200 over £60,000.
💡 Who Pays the Charge?
The charge is paid by the partner whose income is over the £60,000 threshold. If both partners exceed the limit, the partner with the higher income pays.
“Partner” refers to someone you’re not permanently separated from, whether married, in a civil partnership, or living together as though you were.
⚠️ What You Need to Know:
If you are affected by HICBC, you can:
Opt out of receiving the Child Benefit payments altogether.
Continue receiving them and pay the tax charge at the end of the tax year by filing a self-assessment tax return.
📢 What’s Next?
The Spring 2024 Budget proposed reforms to address the unfairness where a single person earning £60,001 pays the charge, but two partners earning £60,000 each do not. However, the Autumn 2024 Budget announced these plans are being scrapped.
We’ll have to wait and see what happens next…