Documents to download

The High Income Child Benefit Charge (HICBC) provides for Child Benefit to be clawed back through the tax system from families where the highest earner has an income in excess of £50,000, to be withdrawn completely where that person has an incomes of over £60,000. The HICBC was introduced in 2013, following initial proposals announced by the then Chancellor George Osborne in October 2010 for withdrawing Child Benefit from higher rate payers, which Mr Osborne modified in the 2012 Budget.[1]

The HICBC is collected through self assessment, so that individuals who are liable to pay it are required to file an annual tax return if they do not already do so. There have been concerns about the number of taxpayers who have been charged penalties for failing to register their liability and pay the charge through their tax return.

Rather than pay the HICBC, individuals who have been awarded Child Benefit may make an election not to receive this payment. There have also been concerns that some families have decided simply not to claim Child Benefit, without being aware of the potential impact this may have on their entitlement to contributory benefits.

This note gives a short background to the introduction of the HICBC and long-standing criticisms that have been made of its design, before looking at these two sets of concerns about its operation, and recent debate as to whether the HICBC should be reformed.

Notes : 

[1] The policy background to the introduction of the HICBC is discussed in, Child Benefit for higher income families, Commons Briefing paper CBP6299, 16 April 2012.


Documents to download

Related posts

  • Digital Services Tax

    This paper discusses the background to the Government's proposals, announced in the 2018 Budget, to introduce a Digital Services Tax from April 2020, in the context of wider concerns as to the challenge of taxing digital businesses and moves to agree reforms to the international tax system.

    Digital Services Tax
  • VAT on tourism

    This note gives a short introduction to the way VAT works, and the significance of EU VAT law has had for setting VAT rates, before discussing the campaign for a lower VAT rate on tourist services and the Government's introduction of a temporary 5% rate in July 2020.

    VAT on tourism