If either you or your partner earns more than £50,000 a year before tax, you’ll have to pay back some (or all) of your Child Benefit in the form of extra Income Tax.
What’s in this guide
- Is it worth claiming Child Benefit if you earn more than £50,000?
- You and your partner each earn less than £50,000 a year
- Either you or your partner earns between £50,000 and £60,000 a year
- Either you or your partner earns more than £60,000 per year
- If you want your Child Benefit payments to stop
- If you want to continue getting your Child Benefit
Is it worth claiming Child Benefit if you earn more than £50,000?
If you or your partner earn more than £50,000 a year, you might choose not to apply for Child Benefit because of the extra income tax you’ll be charged. However, it could still be a good idea to apply for it, especially if either you or your partner aren't working or earn below the lower earnings limit for National Insurance Contributions.
By making sure you still put in your claim for Child Benefit – even if you’ve decided not to take the payments — you make sure you don’t miss out on:
National Insurance credits to protect your entitlement to State Pension
your child being automatically issued with a National Insurance number before their 16th birthday
other benefits – for example, Guardian’s Allowance.
You and your partner each earn less than £50,000 a year
If you and your partner each earn less than £50,000 a year, you’ll receive the full amount of Child Benefit without having to pay any of it back.
Either you or your partner earns between £50,000 and £60,000 a year
If either you or your partner earns between £50,000 and £60,000 a year before tax, you’ll have to pay a portion of your Child Benefit back in extra Income Tax.
How does it work
You’ll still get paid the full amount of Child Benefit each month – or each week, if you’re paid weekly.
But whichever one of you has the higher income will have to pay more Income Tax to repay the portion of Child Benefit you no longer qualify for.
You’ll need to fill in a Self Assessment tax return so HMRC can calculate the amount of extra Income Tax you’ll have to pay.
Top tip
Are you at home looking after your baby or children – and not paying National Insurance? Then claiming Child Benefit will help you protect your State Pension. This is because you’ll get credits towards your State Pension.
Find out more at the Child Benefit Office or call 0300 200 3100
How much do you have to pay back?
You'll have to pay back 1% of your family’s Child Benefit for every extra £100 you earn over £50,000 each year.
This is known as the High Income Child Benefit Tax Charge. To pay the tax charge, you’ll need to register for Self Assessment and complete a Self Assessment tax return each year. If you don’t normally send a tax return to HMRC, you’ll need to register by 5 October following the tax year you need to pay the charge.
For more information on High Income Child Benefit Tax Charge and to register for Self Assessment, go to GOV.UKOpens in a new window
Example
Katya and Leroy have a baby. Katya is staying at home to look after the baby. Leroy earns £51,000 a year (this is his adjusted net income).
Because Leroy earns more than £50,000, he has to pay extra tax to repay some of their Child Benefit.
His income is £1,000 (10 x £100) over the limit, so the extra tax is 10% of their Child Benefit of £21.80 a week. So, he pays extra tax of £113.36 a year (£2.18 x 52).
Get an estimate of how much tax you’d have to pay because of your Child Benefit by using the Child Benefit tax calculator at GOV.UKOpens in a new window
Either you or your partner earns more than £60,000 per year
If either you or your partner has an income of more than £60,000 a year before tax, you'll have to repay all your Child Benefit as Income Tax.
How does it work
You’ll still get paid the full amount of Child Benefit each month – or each week, if you’re paid weekly.
But whichever one of you has the higher income will have to pay back the full amount in the form of Income Tax.
You’ll need to fill in a Self-Assessment tax return so HMRC can calculate the extra Income Tax you’ll have to pay.
If you want your Child Benefit payments to stop
You can choose not to stop receiving Child Benefit payments.
- This avoids the hassle of paying extra tax.
- You won’t have to complete a tax return.
- If your annual income is between £50,000 and £60,000, you’ll end up out of pocket as you’ll be giving up the proportion of Child Benefit you still qualify for.
How can you stop your payments
You should let HMRC know you want to stop your payments.
If you want to continue getting your Child Benefit
Top tip
It’s a good idea to put your Child Benefit payments aside in a high-interest savings account until you know how much you need to pay back.
If you decide to continue getting your payments, you’ll need to register for Self Assessment.
You can choose to keep your Child Benefit payments.
- If your income is between £50,000 and £60,000, you’ll still get the amount you qualify for.
- Even if you’re earning over £60,000, if you put your Child Benefit aside in a savings account, you can earn interest on the money before you have to pay your tax bill.
- You’ll need to pay the extra tax.
- You’ll have to complete a tax return.
How to choose a savings account
Comparison websites are a good starting point if you’re trying to find a savings account to suit your needs.
Popular websites for comparing savings accounts include:
Remember:
- Comparison websites won’t all give you the same results – so make sure you use more than one site before deciding. You want to get the highest interest rate you can find
- It’s also important to research the type of product and features you need before choosing, or changing, supplier.
