HMRC issues alert to people earning between £60,000 and £80,000 | Personal Finance | Finance

HMRC has issued guidance for people earning between £60,000 and £80,000 who may have to repay some or all of their Child Benefit. The warning applies to the High Income Child Benefit Charge, which can affect households where one partner receives Child Benefit and at least one person earns above the threshold.

For tax years from 2024 to 2025 onwards, the threshold applies when an individual’s income is over £60,000. HMRC says people earning more than this may have to repay some of the Child Benefit they receive. Those earning £80,000 or more may have to pay it all back. A spokesperson said: “From tax year 2024 to 2025 onwards, if you or your partner earn more than £60,000 a year, you’ll have to pay some of your Child Benefit back.

“If you or your partner earn £80,000 or more, you’ll have to pay all of it back.

“You’ll pay back 1% of your Child Benefit for every £200 you earn over the threshold. Example: Your adjusted net income is £67,600 in tax year 2024 to 2025.

“This is £7,600 over the £60,000 threshold. As 7,600 divided by 200 is 38, you’ll pay back 38% of your Child Benefit.”

The charge can also apply where someone else receives Child Benefit for a child living with you, provided they contribute at least an equal amount towards the child’s upkeep. HMRC says it does not matter if the child living with you is not your own child.

To work out whether the charge applies, people need to calculate their “adjusted net income”.

This includes total taxable income, such as savings interest and dividends, before Personal Allowances and after certain tax reliefs, including pension contributions and Gift Aid.

From the 2024 to 2025 tax year onwards, people must pay back 1% of their Child Benefit for every £200 they earn above the £60,000 threshold.

Where both partners earn above the threshold, the higher-earning partner is responsible for paying the charge.

HMRC says affected households can either continue receiving Child Benefit and pay the tax charge, or opt out of payments and avoid the charge.