A client earns £68,000 and claims Child Benefit: the 1% per £200 charge worked from £60,000 to £80,000

A client with two children has been paid Child Benefit for years. Last year a bonus took their income to £68,000, and nobody mentioned it. The first they hear of a charge is a tax bill, or a letter, months after the money was spent. This guide gives you the arithmetic to put in front of that client before the year ends, and the two ways the charge can be paid.

The rule on GOV.UK

The charge applies when you or your partner's income is over £60,000 for tax years starting from 2024 to 2025. GOV.UK's wording is that you "pay back 1% of your Child Benefit for every £200 you earn over £60,000", and if you earn over £80,000 you "pay it all back". For earlier years the figures were £50,000 and 1% for every £100.

The page does not give a Child Benefit weekly rate, so this guide works from a round £2,000 a year of benefit. Swap in the client's own figure from their award letter.

The charge at six income levels

Each £200 over £60,000 is one step, and each step takes 1% of the benefit.

Two readings are worth giving a client. First, on this benefit each extra £200 of income costs £20, which is a 10% tax on that slice before ordinary income tax is added. Second, at £70,000 half of the benefit has gone, so for most families the claim is still worth keeping up to that point.

What the old rule would have done

Under the £50,000 and £100 rule, the same £68,000 is £18,000 over, which is 180 steps, and the benefit would have been repaid in full by £60,000. A client who remembers the old rule may believe they are "over the line" and have stopped claiming. At £68,000 today they keep £1,200 of the £2,000 after the charge, so it is worth checking before they cancel.

Two ways to pay

GOV.UK says you can pay the charge through PAYE or through Self Assessment. Self Assessment is needed if you must send a tax return for another reason, such as being self-employed or having savings interest, and it is also the route if you pay later than 31 January in the year after the tax year. A client whose only reason for Self Assessment was this charge can, the page says, switch back to PAYE by phoning HMRC. That is the client's decision, but it is the kind of detail they expect their accountant to know.

What to ask the client

• Whose income is it? The page speaks of "you or your partner". Check which of them is the higher earner before running the figures.
• Is the benefit still being claimed? If the family has stopped claiming to avoid the charge, ask whether the National Insurance credit for the carer has been kept. I did not read the page on that, so check before you advise.
• Is the charge being paid through the tax code? It shows up on the coding notice; see our note on 30 December and the tax code.
• Is a late filing likely? A client who files late meets the penalties in our guide to registering late for Self Assessment.

A client who is a company director near £60,000 may be choosing between salary and dividends, and the dividend tax guide shows the rates for that decision. Put the Child Benefit charge into the same sum, because it adds to the cost of every extra £200 above £60,000.

I did not read HMRC's definition of the income the test uses, nor the rules on how a pension contribution or Gift Aid donation affects it. Both can change the answer for a client near a threshold, so read the full guidance before you quote a figure.

Overlyft builds AI staff who join your practice team and read each client's pay records at the start of the year, flag the ones near £60,000 and prepare a short note of the charge at their income for you to review before it goes to the client.

This is general information, not tax advice. Check GOV.UK and the client's own figures before you advise.