Updated 07/10/25: HMRC issues letter about using new HICBC PAYE service
HMRC has now begun to issue the letter referred to below to encourage taxpayers to use the new HICBC PAYE service where it is appropriate do so. The letter includes a helpful flowchart to help determine if the charge is payable.
Child benefit is paid to households with eligible children. If the claimant or their partner has adjusted net income (ANI) over the threshold amount, the higher earner will need to repay some or all of the child benefit. This is collected by HMRC and is known as HICBC.
How is HICBC calculated?
The thresholds and clawback rates are as follows:
| Tax year | HICBC applies if higher earner’s ANI is at least | Rate of clawback | Child benefit is fully withdrawn once higher earner’s ANI reaches |
|---|---|---|---|
| 2023/24 or earlier | £50,000 | 1% for each £100 over £50,000 | £60,000 |
| 2024/25 onwards | £60,000 | 1% for each £200 over £60,000 | £80,000 |
How is HICBC collected?
Previously, anyone who needed to pay HICBC had to complete an income tax self assessment (ITSA) return. If the amount due was under £2,000, this could be collected via the taxpayer’s PAYE code for a subsequent year, but reporting was still via ITSA. PAYE taxpayers who are only completing ITSA tax returns in order to pay HICBC can now opt out of ITSA and pay HICBC via PAYE instead.
In 2022/23, around 440,000 individuals were liable to pay HICBC. HMRC will be writing to around 100,000 individuals who appear to be liable to HICBC but who aren’t in ITSA to encourage them to use the HICBC PAYE service. The service is a welcome move to reduce the complexity for many individuals by taking them out of ITSA, although they will still need to monitor their liability to HICBC.
To use the service, the taxpayer will first need to de-register from ITSA, as HMRC won’t do this automatically. They should then be able to use the HICBC PAYE service the following day.
Warning
Taxpayers who need to pay HICBC for both 2024/25 and 2025/26 may end up with two sets of HICBC charges in one year’s PAYE code. This would be either their 2025/26 or 2026/27 PAYE code, depending on when they file their 2024/25 tax return and when they chose to use the HICBC PAYE service.
Individuals who complete ITSA tax returns for other reasons will still need to do so.
Opting out of child benefit
Claimants who no longer wish to receive child benefit payments, because for example it will be fully withdrawn as their or their partner’s income is over £80,000, can opt out of receiving child benefit. There are multiple ways that a claimant can opt out: via the online service, by completing an online form, or by phoning or writing to the Child Benefit Office. Agents cannot opt out on a client’s behalf.
Taxpayers are still encouraged to register for child benefit, even if the household opts out of receiving the money, because the non-working parent receives a class 3 national insurance (NI) credit and it triggers the issue of the child’s NI number just before their 16th birthday.
Tax policy update
HM Treasury will be attending ICAEW's Annual Conference 2025 with a session discussing tax policy and economic growth in the weeks ahead of the Budget.
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