If you are a self-employed worker or a contractor in the UK, the High Income Child Benefit Charge (HICBC) is a major tax consideration, and the way you pay it differs significantly from a standard PAYE employee.
The £60k–£80k Band Explained & Why Freelancers Must Claim Differently to PAYE workers. Plus, why, despite the charge, it could still be advantageous to claim Child Benefit
What you need to know now
If you are a self-employed worker or a contractor in the UK, the High Income Child Benefit Charge (HICBC) is a major tax consideration, and the way you pay it differs significantly from a standard PAYE employee.
The crucial changes that took effect from April 6, 2024 (Tax Year 2024/25) are:
| Rates | Old Rule (Up to 2023/24) | New Rule (From 2024/25) |
| Charge Starts | £50,000 | £60,000 |
| Charge Fully Repaid | £60,000 | £80,000 |
| Taper Rate | 1% of CB repaid for every £100 over the threshold | 1% of CB repaid for every £200 over the threshold |
The charge is calculated based on the highest individual earner’s Adjusted Net Income in the household. Adjusted Net Income is your total taxable income minus certain deductions like Gift Aid and gross pension contributions.
In 2022/23, around 440,000 individuals were liable to pay HICBC. According to an ICAEW report, HMRC will be writing to around 100,000 individuals who appear to be liable to HICBC but who aren’t in ITSA to encourage them to use the HICBC PAYE service.
“The service is a welcome move to reduce the complexity for many individuals by taking them out of ITSA, although they will still need to monitor their liability to HICBC,” stated the ICAEW.
To use the service, the taxpayer will first need to de-register from ITSA, as HMRC won’t do this automatically. They should then be able to use the HICBC PAYE service the following day.
Warning
Taxpayers who need to pay HICBC for both 2024/25 and 2025/26 may end up with two sets of HICBC charges in one year’s PAYE code. This would be either their 2025/26 or 2026/27 PAYE code, depending on when they file their 2024/25 tax return and when they chose to use the HICBC PAYE service.
-ICAEW
How you might owe HMRC: The payment divide
The core difference for self-employed individuals and contractors lies in how HMRC collects the charge:
| Tax Status | HICBC Payment Method |
| Self-Employed (Sole Trader, Partnership, Director who files SA) | You MUST continue to pay the HICBC via Self Assessment (SA). The HICBC amount is simply added to your annual tax bill calculated via your Self Assessment return. |
| Contractor Paid via Umbrella/Recruitment Agency (Pure PAYE) | If the HICBC is the ONLY reason you have to file a tax return, you can now use a new HMRC digital service to opt to pay the charge through your PAYE tax code. This removes the need to file a full Self Assessment return solely for this purpose. |
The bottom line for self-employed: If you are a self-employed worker, you are already registered for Self Assessment. You are required to calculate and pay the HICBC as part of your annual tax return.
Why you should still apply for Child Benefit
Even if you or your partner earns over the £80,000 threshold and the full benefit is clawed back, you should still fill out the Child Benefit claim form and immediately choose to opt out of receiving the payments.
This is important because claiming Child Benefit (even if you don’t take the money) provides two non-cash benefits.
- National Insurance (NI) Credits: This ensures the non-earning parent (who claims the benefit) receives NI credits towards their State Pension. This protects the State Pension entitlement for parents who take time away from work to raise children.
- NI Number for the Child: Your child will automatically receive a National Insurance number before they turn 16.
What child benefit can go towards
Child Benefit is a regular payment from the government intended to assist with the general costs of raising a child. You can spend the money on anything from food and clothing to childcare and housing costs.
Weekly Child Benefit Rates (2024/25):
- Eldest or only child: £26.05 per week
- Each additional child: £17.25 per week (Source: GOV.UK)
How to apply for Child Benefit
To apply, you need to complete a Child Benefit claim form (CH2) and send it to HMRC with your child’s original birth or adoption certificate.
- You can download the CH2 form from the official GOV.UK website.
- The application can be backdated, usually by up to three months.
Disclaimer: he upcoming Autumn Budget could impact any benefits, so keep updated on the latest Labour Party policies. Everyone needs to meet the eligibility rules to claim Child Benefit. If you’re moving to the UK from abroad you also need to prove that you:
- live in the UK as your main home – except for short periods, like holidays (in most cases, your child must live with you)
- have the right to reside in the UK
If you have ‘settled’ status under the EU Settlement Scheme you are eligible for Child Benefit. If you have ‘pre-settled’ status check the additional eligibility rules.
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