HIBC is where any one parent in a household earns more than £50,000 per annum; HMRC will commence charging you back for the child benefit received as your income increases above £50,000. The more you earn, the more you repay; capped at what you actually received. Once you hit £60,000, you will have fully repaid the child benefit.

If two parents both earn £49,999 each, they don't repay anything, but a single parent earning £50,001 does. It is usually collected with your tax on the tax return.

RATE: you repay 1% of the child benefit for every £100 earnt over £50,000; Therefore, by the time you reach £60k, the child benefit is fully clawed back.

APRIL 2024, (after 11-years) the threshold is increasing to £60,000.

• Up to 2023-24 - the clawback was 1% for every £100 earnt over £50,000.
• From 2024-25 - the clawback is 1% for every £200 earnt over £60,000 = you don't fully repay the child benefit until your income is £80,000.

Options if you are earning £50,000+: (£60,000+ from April 2024)

1. Don't claim the child benefit in the first place.
2. Claim the child benefit knowing it will need to be repaid later and earn interest on it until you do.
3. Claim the child benefit but elect not to receive it.

TRAPS OF NOT CLAIMING IN OPTION 1

• If one parent earns very little (are under the NI threshold), it will result in a GAP IN THEIR NI RECORD for their state pension.
• This can be rectified with voluntary national insurance payments but these are expensive and there is limit on how far it can be backdated.
• Your child will not automatically receive their NI number when they reach 16-years of age.
• If you choose to opt out of receiving child benefit and your income falls below £50,000 during any tax year (e.g. reduced overtime or bonus) it can be difficult to re-claim your child benefit entitlement.

TIP OF CLAIMING & ELECTING TO RECEIVE THE CASH IN OPTION 2

• Put the money into a savings account or premium bonds whilst holding onto it.
  

TIP OF CLAIMING BUT ELECTING NOT RECEIVE THE CASH IN OPTION 3

• Children will automatically receive their NI number when age 16.
• If the charge clawback is the only reason for having to complete a self-assessment tax return, we can close your self-assessment down.
• If the recipient (usually the mother) doesn't work during whilst children are under age 12, they will receive an automatic credit for your state pension.

Pro Advice - As receiving the benefit is linked to other important benefits, I suggest it is important to continue to claim it and choose not to receive it if you wish.

For further advice please call me or visit; https://www.moneyadviceservice.org.uk/en/articles/changes-to-child-benefit-from-2013