Simplified Tax for Families: HMRC to Move High-Income Child Benefit Charge to PAYE

A significant administrative change from HMRC that aims to simplify the tax affairs for thousands of employed parents went live in august. The High-Income Child Benefit Charge (HICBC) can now be collected through Pay As You Earn (PAYE) for those earning between £60,000 and £80,000, removing the need for many to file an annual Self-Assessment tax return solely for this purpose.

Key Change: HICBC via Payroll

The crucial update is the introduction of a new digital service allowing employed taxpayers to pay the HICBC through their regular payroll deduction, rather than needing to complete a Self-Assessment tax return.

Previously, if you or your partner received Child Benefit and the highest earner's adjusted net income exceeded the threshold (currently £60,000 for the 2024/25 tax year onwards), that earner was required to register for Self-Assessment simply to declare and pay the charge. This led to unnecessary administrative burdens for many employees whose tax affairs were otherwise straightforward.

Now, eligible parents will be able to opt to have the HICBC factored into their tax code and deducted directly from their salary. This streamlines the process significantly, turning a complex annual filing requirement into a simple, ongoing payroll adjustment.

When Will the Changes Take Effect?

The new online service for paying the High-Income Child Benefit Charge through PAYE is now live, having been introduced from August 2025.

Taxpayers who are newly liable for the charge, or those who previously filed Self-Assessment solely for the HICBC, can use the new HMRC digital service to opt in. Once they do, their tax code will be adjusted to collect the charge via PAYE.

Who is Affected?

This change impacts families where one parent or partner has an adjusted net income that is over £60,000 but less than £80,000 a year, and Child Benefit is being received.

• The HICBC applies at a rate of 1% of the Child Benefit received for every £200 of adjusted net income over the £60,000 threshold.

• The benefit is fully withdrawn once the adjusted net income reaches £80,000.

• The change in payment mechanism to PAYE applies specifically to employed individuals who do not have other reasons to file a Self-Assessment return (e.g., self-employment income, complex investment income, or rental income).

Action for Styles & Associates Clients

We advise clients who have been filing Self-Assessment returns solely for the High-Income Child Benefit Charge to consider using this new PAYE service.

1. Check Eligibility: Ensure your only reason for filing a Self-Assessment return is the HICBC.

2. Opt In: You can use the new online service or the HMRC app to report your family's Child Benefit payments and opt to have the charge collected through PAYE.

3. Cancel Self-Assessment: If you switch to PAYE collection and have no other Self-Assessment requirements, you must inform HMRC to withdraw your Self-Assessment registration.

This move by HMRC is a welcome simplification that will save time and reduce the administrative burden for many higher-earning families.