Elimination of High-Income Child Benefit Changes in the 2024 Autumn Budget: Chancellor Abandons Reforms for Wealthy Families' Benefits
In a significant move to simplify the tax system, the UK government has introduced a digital service that allows employees liable for the High-Income Child Benefit Charge (HICBC) to pay it directly through PAYE (Pay As You Earn) from summer 2025 [1][5]. This reform aims to streamline the payment process by automatically deducting the charge from salary via an adjusted tax code, similar to Income Tax or National Insurance.
As of the 2025/26 tax year, the HICBC applies if your income exceeds £60,000 a year and child benefit is being paid for a child you live with. The charge tapers at 1% of child benefit received for every £200 of income above £60,000, with full clawback (100% charge) when income exceeds £80,000. If you are in a partnership, only the higher earner is liable for the charge [1][3][4].
Previously, individuals had to submit a self-assessment tax return to pay the charge, which caused complications and potential penalties if missed. The new PAYE digital service, announced in the 2025 Spring Statement, aims to reduce the administrative burden and avoid fines for those unaware of the liability [5].
However, the HICBC continues to face criticism, with calls for its abolition due to ongoing issues. Despite this, it remains in effect with the new PAYE payment option available [2].
In the recent Budget, Rachel Reeves, the chancellor, stated that the government will not change the HICBC [6]. Previously, former chancellor Jeremy Hunt had pledged to address this by moving to a system of household income, rather than based on individual parents, from April 2026 [7]. This reform, if implemented, would have ensured that those most in need are not unfairly penalized.
Labour also plans to allow employed individuals to pay the charge through their tax code from 2025 and to pre-prepopulate self-assessment tax returns with child benefit data for those not using the service [8]. The Budget document states that this change would cost £1.4 billion by 2029/2030 [9].
As the HICBC remains active, it's worth noting that currently, child benefit worth up to £1,248 a year starts to be withdrawn when one parent earns more than £60,000 a year [10]. This system has been criticised for being unfair, as it affects single parents more than couples with similar incomes [11].
Experts suggest increasing pension contributions as a way for parents to reduce their child benefit charge liability [12][13]. However, implementing a system based on household income would be a "huge administration task" for HMRC, according to Laura Suter [14].
In summary, the HICBC is still active, but the payment method has been reformed in 2025 to allow easier collection via PAYE, reducing reliance on self-assessment returns. However, the system continues to face criticism, and larger-scale reform may be necessary for a fairer approach.
- The changes in the UK tax system, including the introduction of a digital service for paying the High-Income Child Benefit Charge (HICBC) through PAYE, can have an impact on personal finance matters, as it simplifies the payment process and reduces potential penalties.
- The discussions surrounding the HICBC, such as its continued existence, proposed changes to a household income system, and the potential costs of such changes, fall within the realm of politics and business.
- When planning for retirement, considering ways to reduce the HICBC, like increasing pension contributions, can be an important aspect of general-news-related personal finance and pensions management.
