[UK] HMRC confirms major change to Child Benefit impacting payroll

A major rule change being implemented by HMRC is set to impact UK households in receipt of Child Benefit and the payroll professionals who process their wages, MSN reports.

The change will give parents earning above £60,000 the ability to settle their High Income Child Benefit Charge via their employer's payroll system rather than completing annual tax returns.

The new arrangement was launched by HMRC on September 23. It reportedly enables eligible families to have repayments deducted directly from their wages through adjusted tax codes.

The reform will affect thousands of households who must return portions of their Child Benefit payments due to higher earnings.

These families were previously required to complete Self Assessment forms solely to manage this charge, creating administrative burdens for parents with otherwise straightforward tax affairs.

The charge applies when individual earnings exceed £60,000 annually, with families repaying one per cent of their Child Benefit for each £200 earned above this threshold. Those earning beyond £80,000 must return the entire benefit amount.

Employed parents who don't require Self Assessment for other purposes can use the new PAYE collection method. Those with additional filing obligations, such as self-employment or rental income, must continue using Self Assessment to settle the charge.

The system allows HMRC to modify tax codes, spreading repayments throughout the year rather than requiring a lump sum payment.

Dan Tomlinson - Exchequer Secretary - said, "We're modernising HMRC to make tax simpler.

"Tens of thousands of parents will no longer have to go through the extra effort of filing a tax return as this new, simple and straightforward system takes the stress out of paying the High Income Child Benefit Charge (HICBIC).

"If they sign up, they will then be issued with a new tax code which will reflect their HICBC deduction.

"Any fluctuations in income and Child Benefit entitlement will be reflected in-year in their tax code."

Families reportedly have until January 31, 2026, to register for the scheme covering the 2024-25 tax year.

Source: MSN

(Quotes via original reporting)

A major rule change being implemented by HMRC is set to impact UK households in receipt of Child Benefit and the payroll professionals who process their wages, MSN reports.

The change will give parents earning above £60,000 the ability to settle their High Income Child Benefit Charge via their employer's payroll system rather than completing annual tax returns.

The new arrangement was launched by HMRC on September 23. It reportedly enables eligible families to have repayments deducted directly from their wages through adjusted tax codes.

The reform will affect thousands of households who must return portions of their Child Benefit payments due to higher earnings.

These families were previously required to complete Self Assessment forms solely to manage this charge, creating administrative burdens for parents with otherwise straightforward tax affairs.

The charge applies when individual earnings exceed £60,000 annually, with families repaying one per cent of their Child Benefit for each £200 earned above this threshold. Those earning beyond £80,000 must return the entire benefit amount.

Employed parents who don't require Self Assessment for other purposes can use the new PAYE collection method. Those with additional filing obligations, such as self-employment or rental income, must continue using Self Assessment to settle the charge.

The system allows HMRC to modify tax codes, spreading repayments throughout the year rather than requiring a lump sum payment.

Dan Tomlinson - Exchequer Secretary - said, "We're modernising HMRC to make tax simpler.

"Tens of thousands of parents will no longer have to go through the extra effort of filing a tax return as this new, simple and straightforward system takes the stress out of paying the High Income Child Benefit Charge (HICBIC).

"If they sign up, they will then be issued with a new tax code which will reflect their HICBC deduction.

"Any fluctuations in income and Child Benefit entitlement will be reflected in-year in their tax code."

Families reportedly have until January 31, 2026, to register for the scheme covering the 2024-25 tax year.

Source: MSN

(Quotes via original reporting)