Should You Pay the Child Benefit Charge Through Your Payslip?

If you or your partner are claiming child benefit but one of you earns over £60,000 a year, you may be familiar with the High Income Child Benefit Charge (HICBC)—a tax charge that claws back some or all of the child benefit you’ve received.

From summer 2025, HMRC is introducing a new option: instead of dealing with this charge through a tax return, it can now be collected automatically through your monthly PAYE payslip.

But does this make life easier? Should you still claim child benefit at all? And which option gives you the best financial outcome?

Let’s break it down.

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What Is the High Income Child Benefit Charge?

Child benefit is a regular payment made to families responsible for children under 16 (or up to 20 if in full-time education). In 2025/26, it pays:

• £26.05 per week for the oldest child

• £17.25 per week for each additional child

So for three children, that’s around £3,148.60 per year.

However, if you or your partner earns more than £60,000, the government starts to claw back some of this benefit through the HICBC.

• For every £200 over £60,000, you lose 1% of your child benefit.

• If your income is £80,000 or more, the entire benefit is repaid.

This tax is paid by the higher earner in the household, and up until now, this has meant having to fill in a self-assessment tax return each year—even if you had no other reason to do one.

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What’s Changing in 2025?

From summer 2025, HMRC is offering a new way to pay the charge:

You’ll be able to log in to an online system, report your family’s child benefit claim, and have the charge collected through PAYE—your employer’s payroll. This means:

• The tax is taken automatically from your salary

• You might not need to file a tax return anymore, as long as your income is only from PAYE employment

This could be a welcome change for many busy families who want to avoid the hassle of doing a tax return just for the HICBC.

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Should You Still Claim Child Benefit?

Many high earners have considered not claiming child benefit at all to avoid this issue—but this can actually do more harm than good.

Let’s look at your three options if you earn over £80,000:

Option 1: Don’t claim child benefit

This may seem like the simplest option, but don’t do it without considering the consequences. Even if you don’t need the cash, claiming child benefit ensures that the person receiving it (usually the lower earner or stay-at-home parent) receives National Insurance credits, which count toward their state pension.

Not claiming could result in missing qualifying years, reducing the pension entitlement later on.

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Option 2: Claim, but choose not to receive the money

This allows you to keep the NI credits for pension purposes, without having to repay the benefit later—because you haven’t received any.

This avoids both the charge and the need for a tax return, and you can turn payments back on later if your income falls below the threshold.

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Option 3: Claim, receive the money, and pay the charge

Even if you’ll have to pay the full amount back through the charge, there may be a cashflow advantage here.

You receive the benefit throughout the year (in regular payments), but don’t have to pay it back until the following 31 January after the tax year ends—meaning up to 21 months of using the money interest-free.

Example:

If your family receives the full £3,148.60 starting in April 2025, and you save this in a tax-free savings account like an ISA, you could earn interest on that money. Then, when the time comes to repay it in January 2027, the investment has earned a profit—and you keep the interest.

This makes claiming and repaying the benefit an effective interest-free loan with financial upside.

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What About the New PAYE Option?

The new PAYE method will deduct the charge as you go, meaning the money never hits your bank account in the first place—it’s deducted monthly, alongside your regular income tax.

This could be more convenient for those who:

• Don’t want to deal with tax returns

• Prefer the tax to be handled automatically

However, it removes the cashflow and interest-earning benefit of holding on to the money until January the following year.

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Summary: What’s Best for You?

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Final Thoughts

If you’re earning over £60,000 and your family claims child benefit, it’s essential to consider your options. With the new PAYE collection route starting in summer 2025, many will find the process easier—but convenience might come at the cost of financial flexibility.

At Merranti Accounting, we help clients understand which option is best for their situation—whether it’s managing the child benefit charge, filing returns, or optimising tax planning across the board.

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Want to make sure you’re getting the best outcome for your family?

Get in touch with Merranti Accounting today.
We’ll help you decide whether PAYE, self-assessment, or adjusting your claim is the most tax-smart move for you.