35,000 families will be told to pay back Child Benefit payments – here’s why
Why more families will have to repay Child Benefit payments
- An additional 35,000 families are projected to be affected by the High Income Child Benefit Charge (HICBC) by the 2028-29 tax year, bringing the total to 359,000.
- This increase is primarily due to frozen tax thresholds, which are pulling more families into the 'high earner' category as nominal earnings rise, despite families potentially not being better off in real terms.
- The HICBC applies if someone in a household earns over £60,000, with repayments starting at 1 per cent for every £200 earned over this threshold, leading to full repayment at £80,000 or more.
- Many families are unaware they are subject to the charge until they receive a letter from HMRC, as the calculation is based on adjusted net income, which includes savings interest, property income, and dividends.
- Families can legitimately reduce their adjusted net income to avoid the charge by making pension contributions or donations to registered charities, or they can opt not to receive payments while still claiming National Insurance credits.