From August 2025, employed taxpayers will no longer need to complete a self assessment tax return solely to declare and pay the high-income child benefit charge (HICBC).
What This Change Means
This significant change will affect thousands of families who currently have to complete self assessment returns just to pay the high-income child benefit charge. The new system promises to streamline the process for employed taxpayers while maintaining the same tax outcomes.
This article covers everything you need to know about these important changes and how they might affect your family’s tax obligations:
- What Is The High-Income Child Benefit Charge?
- The Current System’s Limitations
- The Streamlined Approach From August 2025
- Who Still Needs Self Assessment?
What Is The High-Income Child Benefit Charge?
The HICBC is a tax charge that effectively claws back child benefit payments when the higher-earning parent in a household exceeds certain income thresholds. The system ensures that families with higher incomes don’t receive the full child benefit entitlement.
For the 2024-25 tax year, the charge works as follows:
- The charge applies to adjusted net income between £60,000 and £80,000
- You pay 1% of the child benefit received for every £200 of income in this bracket
- At £80,000 of income, the charge reaches 100%, meaning you effectively pay back all child benefit received
The Current System’s Limitations
Until now, even parents who earn their entire income through employment have been required to complete a self assessment tax return purely to declare and pay the HICBC. This creates unnecessary administrative burden for taxpayers whose financial affairs are otherwise straightforward.
The Streamlined Approach From August 2025
The Government has confirmed a significant simplification: you’ll no longer need to complete a self assessment return solely for HICBC purposes.
Instead, eligible taxpayers will use a new online service that allows them to:
- Report their family’s child benefit payments
- Opt to have the HICBC collected directly from their payslip through PAYE
This change applies specifically to individuals whose only income comes from PAYE employment.
Who Still Needs Self Assessment?
The simplified process only applies to those with straightforward tax affairs. You’ll still need to file a self assessment tax return if you have income from other sources, including:
- Property rental income
- Self-employment earnings
- Significant investment income
- Other non-PAYE income sources
Support From Digital Tax Matters
This change represents a welcome simplification for many families dealing with the high-income child benefit charge, reducing administrative burden while maintaining the same tax outcomes. However, figuring out whether you qualify for the streamlined PAYE process, understanding how the charge calculation works, and ensuring you’re making optimal decisions about child benefit claims requires careful consideration of your specific circumstances.
Our expert accountants at Digital Tax Matters can help you navigate these changes, assess whether the new PAYE option is right for your family, and ensure you’re managing your child benefit obligations in the most efficient way possible. Get in touch for support today.