How does the high income child benefit charge work for self-employed people?
Answered 17 March 2026
Here is a comprehensive answer on how the High Income Child Benefit Charge (HICBC) works, with particular relevance to self-employed people.
What the law says
The charge itself
The HICBC is a charge to income tax. A person ("P") is liable for a tax year if:
- P's adjusted net income (ANI) exceeds £60,000 (from 2024-25 onwards); and
- either P or P's partner is entitled to child benefit for a week in that tax year, with the charge falling on whichever partner has the higher ANI.
The amount of the charge
The charge equals the "appropriate percentage" of the child benefit received. From 2024-25, the formula is:
(ANI – £60,000) ÷ £200 %
This tapers from 0% (at £60,000 ANI) up to 100% (at £80,000 ANI), at which point the full amount of child benefit is clawed back. Prior to 6 April 2024, the threshold was £50,000 and the taper ran to £60,000.
Adjusted net income and the trading allowance
"Adjusted net income" is defined in s.58 ITA 2007. It starts with net income and is then adjusted (e.g. reduced by grossed-up Gift Aid donations and gross pension contributions).
For self-employed people specifically: if a person claims the full trading income allowance, the income covered by that allowance does not count towards ANI for HICBC purposes. If only partial relief is claimed, only the income covered by the partial relief is excluded.
HMRC guidance / practice
Self Assessment obligation
Self-employed people are already required to file Self Assessment returns. HMRC guidance confirms that the HICBC is one of the reasons a taxpayer must complete a Self Assessment return — this applies equally to employees and the self-employed.
For those not already in Self Assessment, HMRC's position is that a person liable to the HICBC must notify HMRC of their chargeability by 5 October following the end of the relevant tax year. Failure to do so can result in discovery assessments and penalties.
The charge is paid through Self Assessment
The HICBC is declared and paid through the Self Assessment return. The first balancing payment was due by 31 January 2014 (for 2012-13). For self-employed people already filing returns, the HICBC is simply an additional entry on their return.
Opting out of Child Benefit payments
As an alternative to paying the charge, the Child Benefit claimant (or their partner) can elect not to receive Child Benefit payments. They remain entitled to Child Benefit (preserving NI credits etc.) but receive no payments, and therefore no charge arises.
Rate summary (for reference)
| Period | Threshold | Taper rate | Full charge at |
|---|---|---|---|
| 7 Jan 2013 – 5 Apr 2024 | £50,000 | 1% per £100 | £60,000 |
| From 6 Apr 2024 | £60,000 | 1% per £200 | £80,000 |
In summary for a self-employed person: The HICBC works the same way as for employees — it is based on ANI (which for the self-employed includes trading profits, net of allowable deductions and the trading allowance). Because self-employed people are already in Self Assessment, they simply include the HICBC on their annual return. The key self-employment-specific point is that claiming the trading income allowance can reduce ANI and potentially reduce or eliminate the charge.
Citation sources
ch accompanies and forms part of this decision notice. RACHEL GAUKE TRIBUNAL JUDGE Release date: 14th MARCH 2023 APPENDIX: RELEVANT LEGISLATION Section 681B of the Income Tax (Earnings and Pensions) Act 2003 (high income child benefit charge): “(1) A person ("P") is liable to a charge to income tax for a tax year if (a) P's adjusted net income for the year exceeds 50,000, and (b) one or both of conditions A and B are met. (2) The charge is to be known as a "high income child benefit charge". (3)
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