Child Benefit shake-up for thousands of parents as HMRC introduces new system

Thousands of families who claim Child Benefit will be able to pay the high income tax charge through their tax code for the first time.

Child Benefit is worth £26.05 a week for your first child, then £17.25 for any additional child. You are awarded Child Benefit if you are responsible for looking after a child - but if you, or your partner, are on a high income, then you may have to pay back some of this benefit back.

If either of you earn over £60,000, you have to pay back 1% of your Child Benefit for every £200 you earn over £60,000. This is known as the High Income Child Benefit Charge.

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Once you earn over £80,000, you pay back 100% of your Child Benefit. You normally have to pay the high income charge through self-assessment - but now, there is the option to pay it through your PAYE tax code.

This means HMRC will change your tax code and the charge will be taken from your pay. You can use this service if you're employed and don't need to file a self-assessment return for any other reason.

You have until January 31, 2026 to opt in for the latest 2024/25 tax year, which ended on April 5, 2025. You can still pay the high income charge through self-assessment if you want to.

If you normally have to file a self-assessment anyway, then you won't be able to use the new PAYE option. If you're a high income household, you can make a claim for Child Benefit without getting the payments.

This would mean you still get National Insurance credits which count toward your state pension, but you wouldn't need to pay the charge.

Child Benefit is claimed by more than seven million families. You can claim it if you're responsible for a child under the age of 16, or if they are under the age of 20 and still in approved education or training.

This can include A-Levels, NVQs or even home education, but it does not include university or BTEC qualifications. The child normally has to live with you, or you pay at least the same amount as Child Benefit toward looking after them, in order for you to claim the payments.

You can claim Child Benefit if you fostered a child, as long as the local council is not paying anything towards their accommodation or maintenance, if you adopted your child.

You may also be entitled if you're looking after a child for a friend or relative. There is no limit for how many children you can claim Child Benefit for, but if two people look after a child, only one person can claim Child Benefit.

Dan Tomlinson, Exchequer Secretary, said: "We’re modernising HMRC to make tax simpler. Tens of thousands of parents will no longer have to go through the extra effort of filing a tax return as this new simple and straightforward system takes the stress out of paying the High Income Child Benefit Charge (HICBIC).

He added: "If they sign-up they will then be issued with a new tax code which will reflect their HICBC deduction. Any fluctuations in income and Child Benefit entitlement will be reflected in-year in their tax code."