Boost for over 100,000 families on Child Benefit as new HMRC payment system rolled out

More than 100,000 families will avoid having to manually pay a Child Benefit charge thanks to a new HMRC online service, new figures suggest.

The households will be spared applying to fork out for the High Income Child Benefit Charge (HICBC) through a self-assessment tax return after the new payment system came into effect in September, based on figures obtained by wealth management company Quilter via a Freedom of Information (FOI) request, shared with MoneyWeek.

The HICBC is paid by families where the highest earner has a yearly income over £60,000, with deductions of 1% made for every £200 of income above this threshold. Once earnings reach £80,000 or more, all Child Benefit has to be repaid.

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Prior to 23 September 2025, affected families had to manually pay this charge via self-assessment, leaving some who forgot racking up giant bills.

However, the new system in place since then means some people can have their HICBC collected directly through their salary or pension via Pay As You Earn (PAYE).

According to the FOI figures obtained by Quilter, there were 102,000 taxpayers in the 2021/22 financial year who were liable for the HICBC and would have paid it automatically based on the new payment system.

That figure rose to 126,000 in 2022/23, as more households were dragged into paying the charge.

Quilter said despite the HICBC threshold being raised from £50,000 to £60,000 in 2024, which may have reduced the number of families paying the charge, wage growth is likely to have pulled more into the HICBC net.

This means more than 100,000 households, as it stands, are likely to benefit from the new payment system and not face the self-assessment process every financial year.

Shaun Moore, tax and financial planning expert at Quilter, said: “For years a large number of higher earning parents have found themselves dragged into the self assessment system purely to repay part of their Child Benefit, even though their income was already taxed through PAYE.

“Allowing the charge to be collected through a tax code brings the process back in line with how most people expect their taxes to work and will remove a great deal of frustration.”

How to pay the HICBC through the new system

HMRC has a dedicated page on its website where taxpayers can pay the HICBC through PAYE, if they’re eligible.

You are eligible if you do not need to send a tax return for another reason. For example, if you are self-employed and would ordinarily need to file a self-assessment tax return, you won’t qualify for this system.

You have to complete the process on or before 31 January in the year after the tax year you need to pay for. So, if you want to pay the charge via PAYE for the current tax year (2025/26), you need to apply to pay on or before 31 January, 2027.

If you currently complete a self-assessment tax return solely to pay the HICBC, you need to contact HMRC to leave self-assessment and register to pay through PAYE. The number to call is 0300 200 3310.

HMRC will then update your tax code and you will pay the charge through a deduction from your salary or pension income.

Is it worth claiming Child Benefit if you earn over £80,000?

You might think claiming Child Benefit is pointless if you or your partner earns over the £80,000 threshold, as you will repay the money via HICBC.

However, it is still worth claiming the benefit and telling HMRC you don’t want to receive the payments as, if your child is under the age of 12, you will qualify for National Insurance credits.

This is particularly useful for people who are missing NI years and aren’t in line to receive a full state pension – the credits can plug some gaps on your National Insurance record, helping you build up your state pension.

It also means your child can receive their NI number without you having to apply for it. The number is usually sent before their 16th birthday.