Child Benefit is a lifeline for many families, helping with the cost of raising children. It’s one of those areas where a little guidance can go a long way, so let’s walk through the latest updates for the 2025–2026 tax year, including what you need to watch out for with the High Income Child Benefit Charge (HICBC).
🌟 New Child Benefit Rates (from 6 April 2025)
We’re pleased to share that Child Benefit payments have increased this year:
- Eldest or only child: £26.05 per week (up from £25.60)
- Each additional child: £17.25 per week (up from £16.95)
Annually, this means:
- One child: £1,354.60
- Two children: £2,251.60
- Three children: £3,148.60
A helpful boost for family budgets!
High Income Child Benefit Charge Thresholds and What They Mean
If your (or your partner’s) adjusted net income is above certain thresholds, you might be affected by the High Income Child Benefit Charge (HICBC). Here’s how it works:
- £60,000–£80,000: You’ll pay a tax charge that gradually increases—1% of the Child Benefit received for every £200 of income over £60,000.
- Above £80,000: The charge equals the entire Child Benefit received, effectively cancelling out the payments.
Adjusted net income includes your total taxable income minus certain deductions (like pension contributions or Gift Aid donations).
🤔 Should You Claim Child Benefits As A High Earner?
If you’re affected by the HICBC, you have two choices:
1️⃣ Keep getting the benefit and pay the charge at the end of the tax year via your Self-Assessment tax return.
2️⃣ Opt out of payments so you don’t have to pay the charge. But remember—it’s still worth registering your claim, so you don’t miss out on National Insurance credits, and so your child can get their National Insurance number automatically.
⚠️ Disadvantages of Not Claiming Child Benefit
While it might seem tempting to avoid claiming this benefit to steer clear of the High Income Child Benefit Charge, there are significant consequences to be aware of:
- Loss of National Insurance (NI) Credits:
Claiming even if you don’t receive the payments ensures you earn NI credits. These are crucial for your State Pension entitlement, especially if one parent is at home caring for the children. NI credits help fill any gaps in your NI record. - Impact on State Pension:
To qualify for the full State Pension, you need a minimum of 35 qualifying years of NI contributions or credits. Not claiming can make it harder to build a full NI record over time. - Difficulty Obtaining a NI Number for Your Child:
Your child’s NI record is automatically created when you claim Child Benefit, even if payments are waived. Without a claim, your child will need to apply separately for their NI number—something that can delay future steps like starting work, opening an ISA, or applying for student loans. - Potential for HICBC Issues:
Opting out of claiming Child Benefit to avoid the HICBC can unintentionally mean losing NI credits, which may harm the long-term financial security of both parents and the child.
📌 Our Recommendation
Generally, we advise that parents do claim even if you plan to opt out of receiving the payments to avoid the HICBC. This way, you protect your National Insurance record and ensure your child’s NI number is set up without delay. You can then choose to opt out of payments, avoiding the tax charge while still benefiting from the important protections that claiming provides.
🔍 Need Help Calculating the Child Benefit Tax Charge?
HMRC offers an easy-to-use Child Benefit tax calculator to estimate:
✅ How much benefit you’re entitled to
✅ Any HICBC you might owe
Find it here: GOV.UK – Child Benefit tax calculator
👥 We’re Here to Help
We know this can get a bit complicated, but you’re not alone. At McCarthy Browne, we’re here to guide you every step of the way from understanding how the changes affect you to making sure you stay on top of your tax planning.
If you have any questions or want to talk through your options, please don’t hesitate to get in touch. We’re always happy to help you make sense of the numbers and ensure your family gets the support it deserves.
