The High Income Child Benefit Charge (HICBC) claws back Child Benefit when one parent's adjusted net income is between £60,000 and £80,000. The charge is 1% of the benefit for every £200 of income over £60,000, so at £80,000 all of it is repaid.
What it costs at different incomes
Example: two children. At 2025/26 rates Child Benefit is about £1,354 a year for the first child and about £897 for the second, about £2,251 in total.
| Adjusted net income | Charge | Benefit kept |
|---|---|---|
| £60,000 | £0 | about £2,251 |
| £65,000 | 25%, about £563 | about £1,688 |
| £70,000 | 50%, about £1,126 | about £1,125 |
| £80,000 | 100%, about £2,251 | £0 |
Why the effective tax rate is so high
In this band each extra £1,000 of income costs £400 in income tax, £20 in National Insurance (2% above the upper limit), and about £113 in lost Child Benefit for two children. With student loan repayments on top, the marginal rate climbs higher still.
The pension lever
Pension contributions reduce adjusted net income. Example: income £70,000, a personal pension contribution of £10,000 gross (£8,000 paid in, £2,000 added at source).
- Adjusted net income falls to £60,000, so the £1,126 charge disappears.
- You claim the extra 20% higher-rate relief (£2,000) through self assessment.
- Net cost of putting £10,000 into the pension: about £8,000 - £2,000 - £1,126 = about £4,874.
Salary sacrifice works in a similar way and can save National Insurance too.
Two practical points
- Keep claiming Child Benefit even if the charge cancels it: the claim protects National Insurance credits for a parent who isn't working.
- The charge applies to the partner with the higher income, regardless of who receives the benefit.
Rules and rates change; check GOV.UK for the current tax year.
Free tools
- Retirement savings calculator: https://smartbudgetsheets.surge.sh/calculators/retirement-savings-calculator/?utm_source=mataroa
- Pay raise calculator: https://smartbudgetsheets.surge.sh/calculators/pay-raise-calculator/?utm_source=mataroa
- Debt Payoff Planner, up to 8 debts (Payhip): https://payhip.com/b/PtBLU?utm_source=mataroa
- 42 free budget templates, pay what you want ($0 is fine): https://smartbudgetsheet.gumroad.com/l/ngpkrb?utm_source=mataroa
General information, not financial advice. Figures are rounded examples.