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The Hidden Cost of Earning Over £60,000
Many parents continue to claim Child Benefit without fully realising that higher earnings can trigger a tax charge known as the High Income Child Benefit Charge (HICBC). This applies when one partner in a household earns more than £50,000 per year, with the charge increasing gradually until, at £60,000 or more, the full amount is effectively clawed back.
A recent tax tribunal case illustrates just how easily this can catch people out—and how important it is to understand your responsibilities when it comes to reporting and paying this charge.
The Background: What Happened?
In this case, a taxpayer had an income above £60,000 during the 2017/18 tax year. His partner continued to receive Child Benefit, which, given his income level, made him liable for the full HICBC.
He submitted a self-assessment tax return but did not include the child benefit charge. HMRC noticed the omission, opened an enquiry into the return, and then adjusted his tax assessment to include the charge. Unsurprisingly, he appealed.
The Argument: Whose Responsibility Is It?
The taxpayer’s main argument was that HMRC should have informed him of the charge. Since they already had access to his income data, and also allowed his partner to keep receiving Child Benefit, he assumed he was not liable for the charge.
He felt misled and believed that HMRC should have flagged the issue before pursuing him later for underpayment.
The Decision: No Duty to Inform
The tribunal hearing made one thing clear: even if HMRC knows about your earnings, they are under no obligation to tell you when a tax charge applies.
The ruling reinforced several key points:
- Tax is self-assessed. It is the taxpayer’s duty to understand and calculate what they owe based on their income and family situation.
- HMRC is not required to track or monitor your income for you, even if they already have the data.
- There is no right of appeal based on perceived fairness. If a taxpayer wants to argue that they were misled or had a legitimate expectation not to pay a charge, this is a matter for judicial review in higher courts—not for tax tribunals to decide.
What This Means for You
If you or your partner claims Child Benefit and your income rises above £50,000 in any tax year, the following rules apply:
- From £50,000 to £60,000: A partial tax charge applies, clawing back 1% of the benefit for every £100 of income over £50,000.
- Over £60,000: The full amount of Child Benefit must be repaid through the tax system.
To stay compliant:
- Monitor your earnings: Keep an eye on your adjusted net income each tax year.
- Complete your self-assessment return accurately: Use the correct boxes to declare your Child Benefit liability.
- Get help if you’re unsure: Speak to a tax advisor who can confirm whether you owe the charge.
Key Takeaways
- You can’t rely on HMRC to tell you about new liabilities. Even if they know your income level, they won’t automatically issue a warning about HICBC.
- Mistakes or omissions in your tax return can lead to amended assessments, with additional tax and possibly penalties.
- Fairness is not a defence. Even if HMRC gave you the impression that you were in the clear, the law places the responsibility on you.
Know the Rules—Or Risk the Bill
The Child Benefit system supports families, but above a certain income, it can become a liability. This highlights a common misunderstanding: receiving payments doesn’t mean you can keep them.
Understanding your obligations, filing correctly, and staying aware of income thresholds are essential if you want to avoid unexpected tax bills—and unnecessary legal disputes.
Need help navigating the High Income Child Benefit Charge?
At Tax Accountant, we guide clients through every aspect of self-assessment, including complex issues like HICBC. Whether you need help calculating your liability or correcting a past return, we’re here to help. Get in touch today and take the guesswork out of your tax return.