Taxation (UK) · The use of exemptions and reliefs in deferring and minimising income tax liabilities

Child Benefit Income Tax Charge for ACCA TX-UK

Updated 11 October 2026 · Fact-checked

The high income child benefit charge is an income tax charge on a taxpayer whose income is between £60,000 and £80,000 and who, or whose partner, receives child benefit. The charge is 1% of the child benefit for every complete £200 of income over £60,000. At £80,000 the charge cancels all of the benefit.

Understand Child Benefit Income Tax Charge

Child benefit is paid to a parent or carer. It is not taxed when received. But if the taxpayer's income is high, an income tax charge claws some or all of it back.

The tax table you are given states the rule: where income is between £60,000 and £80,000, the charge is 1% of the child benefit received for every £200 of income over £60,000. So the charge grows in small steps. Once income reaches £80,000 the charge is 100% of the benefit, and it goes no higher.

The measure of income is adjusted net income. This is total income after deducting the trading losses and other deductions allowed in arriving at net income, and then deducting gross personal pension contributions and gross Gift Aid donations. Pension and Gift Aid payments made under relief at source are paid net, so you must gross them up (divide the net payment by 80%) before deducting. This is why a pension contribution can reduce or remove the charge.

The charge falls on the person with the higher adjusted net income in the couple, even if the other person claims the benefit. The charge is added to that person's income tax liability. It is not a deduction from income.

To avoid or cut the charge you can lower adjusted net income. You can make personal pension contributions or Gift Aid donations. Or you can move income-producing assets to a spouse or civil partner who has lower income, so the higher earner has less income. The transfer must be a genuine outright gift. Pension and Gift Aid relief is also capped, so check the cap and the annual allowance.

Key rules to remember

Child benefit charge rate: Charge % = number of complete £200 of adjusted net income over £60,000 × 1%; Applies where income is between £60,000 and £80,000. Ignore any part of £200.
Child benefit charge: Charge = child benefit received × charge %; The charge is 100% of the benefit once income reaches £80,000. It cannot exceed the benefit.
Adjusted net income: Adjusted net income = net income − gross personal pension contributions − gross Gift Aid donations; Gross up payments made net under relief at source: net ÷ 80%.
Gross up a net payment: Gross payment = net payment × 100 ÷ 80; Basic rate is 20%, so a net £8,000 becomes a gross £10,000.

How to solve Child Benefit Income Tax Charge questions

Use this order for any question on the charge. Keep the child benefit figure for the tax year as given in the question.

1Identify who has the higher adjusted net income. That person is liable for the charge.
2Find total income, then work out net income after any allowable deductions such as trading losses.
3Deduct gross personal pension contributions and gross Gift Aid donations to reach adjusted net income. Gross up net payments first.
4Subtract £60,000. If the result is nil or negative, there is no charge. If it is £20,000 or more, the charge is 100% of the benefit.
5Divide the excess by £200 and round down to a whole number. Each whole number is 1%.
6Multiply the child benefit received for the tax year by that percentage. Add the result to the income tax liability.
7If planning is asked for, recalculate with the pension contribution, Gift Aid donation or income transfer and state the saving.

Quickest way: Round down, then take the percentage

When to use it: Use this in Section A or B objective questions where you need the charge fast.

Compute adjusted net income. Remember to gross up and deduct pension and Gift Aid.
Take away £60,000. Divide by 200 and drop the decimals.
Treat that number as a percentage and apply it to the child benefit.
Check the answer cannot exceed the benefit. At or above £80,000 the answer equals the benefit.

Common mistakes in Child Benefit Income Tax Charge

Using total income instead of adjusted net income
Students forget that gross pension contributions and Gift Aid reduce the measure of income.
Fix: Always write an adjusted net income line first and deduct gross pension and Gift Aid payments.
Deducting the net pension payment
The question gives the cash paid, and students use it directly.
Fix: Gross up by dividing by 80% before deducting from income.
Not rounding down to complete £200 units
Students divide to get a decimal such as 63.25%.
Fix: Only whole £200 count. Round the number of units down.
Charging more than the child benefit
Students keep applying 1% per £200 beyond £80,000.
Fix: Cap the charge at 100% of the benefit received.
Applying the charge to the wrong partner
Students tax the person who claims the benefit.
Fix: The charge falls on the partner with the higher adjusted net income.
Forgetting the wider effect of a pension contribution
Students stop once the charge falls.
Fix: Also note the extension of the basic rate band and any limit from the annual allowance or the cap on income tax reliefs.

Worked examples

Example 1

Tom has adjusted net income of £72,650. His wife has no income. Tom's household receives child benefit of £2,500 in the tax year. Calculate the child benefit income tax charge.

Show the solution

Tom has the higher income, so the charge falls on him.
Income over £60,000 = £72,650 − £60,000 = £12,650.
Complete £200 units = 12,650 ÷ 200 = 63.25, so 63 complete units.
Charge percentage = 63 × 1% = 63%.
Charge = £2,500 × 63% = £1,575.

Answer: The child benefit income tax charge is £1,575.

Example 2

Priya has adjusted net income of £75,000 before any pension payment. Her household receives child benefit of £1,800. She pays £8,000 into a personal pension scheme under relief at source. Calculate the charge before and after the payment, and the saving.

Show the solution

Before the payment: £75,000 − £60,000 = £15,000. 15,000 ÷ 200 = 75 units, so 75%.
Charge before = £1,800 × 75% = £1,350.
The £8,000 is a net payment. Gross payment = £8,000 × 100 ÷ 80 = £10,000.
Adjusted net income after = £75,000 − £10,000 = £65,000.
Excess = £5,000. 5,000 ÷ 200 = 25 units, so 25%.
Charge after = £1,800 × 25% = £450.
Saving in the charge = £1,350 − £450 = £900.

Answer: The charge falls from £1,350 to £450, a saving of £900. Priya also gains from the extended basic rate band, provided the payment is within her annual allowance and the limit on relief.

Exam tips

The £60,000 to £80,000 rule and the £200 step are in the tax tables, but you must remember to round down and to use adjusted net income.
In planning questions, show the charge before and after the pension contribution so the marker can see the saving.
State that the charge is on the higher earner and that the parent who claims the benefit may be different.
When suggesting income shifting, say the gift must be outright and a spouse or civil partner is the usual choice. Do not suggest moving income without the underlying asset.
Check the child benefit figure covers the full tax year. If it does not, use the amount actually received.

Practice questions from The use of exemptions and reliefs in deferring and minimising income tax liabilities

Child Benefit Income Tax Charge in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Child Benefit Income Tax Charge: frequently asked questions

How is the high income child benefit charge calculated?

Take adjusted net income over £60,000 and divide by £200, ignoring any remainder. Treat the result as a percentage of the child benefit received. At £80,000 or more the charge equals the whole benefit.

Can a pension contribution reduce the child benefit charge?

Yes. A gross personal pension contribution reduces adjusted net income, which can reduce or remove the charge. If the contribution is paid net, gross it up first. It must stay within the annual allowance and the cap on income tax reliefs.

Who pays the charge, the claimant or the higher earner?

The partner with the higher adjusted net income pays it. That partner may not be the one who receives the benefit.

Does Gift Aid reduce the charge too?

Yes. Gross Gift Aid donations are deducted in arriving at adjusted net income, in the same way as gross pension contributions. Gross up the cash paid by dividing by 80%.