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High Income Child Benefit Charge

This information is required to calculate the High Income Child Benefit Charge, where applicable. This screen is accessed via the Data input tab within the tax return.

  • Total amount received in the year – enter the total amount of child benefit received in the tax year.
  • Number of children – enter the number of children for which the benefit has been received.
  • Date stopped receiving all Child Benefit payments – enter the date that Child Benefit payments were stopped. This field is only available from 2015, and will be included on the Tax Return if it is prior to the end of the current tax year.

How is the High Income Child Benefit Charge calculated?

The charge applies in respect of individuals who are in receipt of Child Benefit and taxable income for a tax year is more than £50,000.

The amount of the charge is equivalent to some, or all of the Child Benefit received and this increases where income is greater than £50,000 up to a maximum of £60,000 at which point the charge is equal to the amount of Child Benefit received. 

The charge is calculated based upon the ‘Adjusted net income’ for the year and the amount of the Child Benefit as follows:

A x B where:

  1. Adjusted net income – income threshold / 100
  2. Child benefit received x 1% (Note: the result is rounded down by HMRC)

Adjusted net income

The ‘Adjusted net income’ is the total taxable income as shown in the Calculation tab in Taxfiler before personal allowances less:

  • Trading losses
  • Gift Aid donations
  • Gross pension contributions and
  • Pension contributions paid net of basic rate tax relief (grossed up)

For more information on ‘Adjusted net income’ https://www.gov.uk/guidance/adjusted-net-income

Example:

Employment income £71,500. Pension contributions paid net of basic rate tax relief £16,500. Child Benefit received £1,115.

Adjusted net income = Total taxable income – pension contributions (grossed up).

 Adjusted net income = 71,500 – (16,500 x 125%) = £50,875. 

Child Benefit Charge = A x B

A 50,875 – 50,000 / 100 = 8 (rounded down)

B 1,115 x 1% = 11.15

Charge for the year = 8 x 11.15 = £89 (result is rounded down by HMRC).

For further information on the High Income Child Benefit Charge https://www.gov.uk/child-benefit-tax-charge HMRC have a calculation tool that calculation the charge arising for all tax years here  https://www.gov.uk/child-benefit-tax-calculator