How to avoid the child benefit tax charge

Child Benefit is a valuable UK government payment that helps families with the costs of raising children. It’s especially useful because it also gives you National Insurance credits, which count towards your State Pension – even if you don’t personally work.

However, if you or your partner earns above a certain level, you may be affected by the High Income Child Benefit Charge (HICBC) – a tax charge that gradually reduces and can even wipe out your Child Benefit.

This article explains how the charge works and what you can do about it for both the 2025/26 and 2026/27 tax years.

What is Child Benefit?

Child Benefit is a regular payment from the UK government to help with the cost of raising children. You can claim it if you’re responsible for a child who is:

• Under 16
• Under 20 if they stay in approved education or training

You can claim for any number of children, but only one person can claim for each child.

Child Benefit weekly rates

2025/26:

• £26.05 for the eldest or only child
• £17.25 for each additional child

2026/27 (provisional):

• £27.05 for the eldest or only child
• £17.90 for each additional child

Why it’s still worth claiming

Even if you don’t want to receive the payments (for example, because of the tax charge), you should still make a claim. That’s because:

• you earn National Insurance credits for each child, which count towards your State Pension eligibility, and
• your child gets a National Insurance number automatically before they turn 16.

What is the Child Benefit tax charge (HICBC)?

The High Income Child Benefit Charge is a tax charge that applies if your adjusted net income (your taxable income after certain deductions) exceeds £60,000 in a tax year. Here’s how it works:

• If your income is £60,000 or below, you keep all your Child Benefit with no tax charge.
• For every £200 of income over £60,000, the charge goes up by 1% of your total Child Benefit for that year.
• If your income reaches £80,000 or more, you’ll have to repay 100% of your Child Benefit through the tax charge.

Importantly, it’s the highest earner’s income in a household that counts – not combined income. So if you and your partner both work, the person with the higher adjusted net income is responsible for the tax charge.

How to avoid or reduce the charge

If you want to reduce or avoid the Child Benefit tax charge, here are the main approaches:

1. Claim but choose not to receive payments

You can submit a Child Benefit claim and tick the box saying you don’t want to receive the cash payments. This means:

• you’re registered for Child Benefit,
• you earn NI credits for State Pension purposes, and
• you don’t trigger the tax charge because you’re not receiving payments to be taxed back.

This is especially useful if your income is above the threshold but you still want the long-term benefits.

2. Reduce your adjusted net income

The HICBC is based on adjusted net income – so reducing this can help you stay below the charge thresholds. Here are common ways to do that:

Pension contributions

Paying more into a pension, especially through tax-relieved contributions, reduces your adjusted net income. That means you might bring your income below £60,000 and avoid or reduce the charge.

Pension contributions are one of the most tax-efficient ways to do this because you get tax relief on them automatically.

The chart below shows the overall value of Child Benefit received for a couple with two children.

On the left, we can see the overall value of the child benefit received if the couple didn't make any pension contributions. As you can see, because their taxable income is above the £60,000 threshold, the benefit is subject to a 60% tax charge. They have to pay back £1,106.

On the right, the same couple makes a pension contribution of £10,000 in the tax year. After receiving 20% tax relief, the total amount deductible from their income is £8,000.

This would then bring their overall taxable income down to £60,000. As a result, there would be no tax charge payable and the value of the child benefit would remain at £2,212.60. They've made a huge saving of £1,106 for the tax year - plus, as a higher earner, they could claim higher rate tax relief back via a self-assessment tax return.

Salary sacrifice

Salary sacrifice schemes allow you to exchange some of your salary for non-cash benefits (like pension contributions or childcare support). This reduces your taxable income and can help you stay under the £60,000 adjusted net income threshold.

To find out more about how salary sacrifice can trim your tax bill, check out our guide to salary sacrifice here.

Gift Aid donations

Donating to charity under Gift Aid doesn’t directly reduce your tax bill, but it increases your basic rate tax band, which can help lower your adjusted net income and reduce exposure to the HICBC.

What if you still earn over £60,000?

If your income remains above £60,000 even after planning, you have a choice:

• Keep receiving Child Benefit and pay the HICBC through self-assessment or via PAYE.
• Opt out of the actual payments but keep the claim active to retain NI credits.

Even if your income goes above £80,000, it’s usually still worth registering (and opting out of payments) so your NI record receives the credits.

Summary

The High Income Child Benefit Charge affects parents if the highest earner’s adjusted net income exceeds £60,000. The charge is phased in and fully clawed back by £80,000.

But with some planning – like claiming and opting out, making pension contributions, using salary sacrifice, or giving through Gift Aid – you can reduce or avoid the tax charge while keeping the long-term benefits of Child Benefit like National Insurance credits and automatic NI numbers for your children.