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Child Benefit and the High Income Charge 2026/27: How Much You'll Actually Keep
If either parent earns over £60,000, HMRC claws back child benefit through the High Income Child Benefit Charge (HICBC). By £80,000, you’ve repaid it all. But you should still claim child benefit even if you earn well above £80,000 — it protects qualifying years for the lower-earning parent’s state pension. And if you’re between £60,000 and £80,000, employer pension contributions can bring your adjusted net income below the threshold and recover thousands in benefit.
Calculate your exact child benefit position →
Key facts: child benefit 2026/27
- Eldest/only child: £26.05/week (£1,355/year)
- Each additional child: £17.25/week (£897/year)
- HICBC starts: £60,000 adjusted net income
- HICBC fully repaid: £80,000 adjusted net income
- Two children annual benefit: £2,252/year
How the HICBC taper works
For every £200 of adjusted net income above £60,000, you repay 1% of your child benefit. By £80,000, that’s 100% repaid.
| Adjusted net income | % of benefit repaid | Net benefit kept (2 children) |
|---|---|---|
| Under £60,000 | 0% | £2,252 |
| £65,000 | 25% | £1,689 |
| £70,000 | 50% | £1,126 |
| £75,000 | 75% | £563 |
| £80,000+ | 100% | £0 |
For one child, the same taper applies but the amounts are smaller — starting from £1,355 at under £60k down to £0 at £80k+.
The HICBC uses adjusted net income, not gross income. For limited company contractors, this means salary plus dividends — but notably not employer pension contributions. This is the key planning lever.
Which contractors are affected?
Limited company directors (outside IR35)
If your total income (£12,570 salary + dividends) exceeds £60,000, you’re potentially in scope. Based on 2026/27 take-home figures:
| Day rate | Total income | HICBC applies? |
|---|---|---|
| £300/day | ~£63,424 | Yes — partial |
| £350/day | ~£70,051 | Yes — partial |
| £400/day | ~£74,380 | Yes — partial |
| £500/day | ~£91,507 | Yes — fully repaid |
| £600/day | ~£108,560 | Yes — fully repaid |
Almost every limited company contractor earning above roughly £270/day will have their child benefit partially or fully clawed back. At £300/day, roughly £63,424 in income means you repay about 17% of your benefit — £383 for two children.
Inside IR35 / umbrella contractors
The same rules apply. Adjusted net income includes your PAYE income. At £500/day inside IR35, your taxable income is around £66,500, putting you in the partial taper zone.
The pension solution
Employer pension contributions reduce your adjusted net income pound for pound. If you can bring your income below £60,000, you keep your full child benefit. If you can’t go that far, every £200 of pension contribution saves you 1% of your annual benefit.
Worked example: £350/day contractor with two children
Without pension contributions:
- Adjusted net income: ~£70,051
- HICBC: 50% of £2,252 = £1,126 repaid
- Net child benefit kept: £1,126/year
With £10,000 employer pension contribution:
- Adjusted net income: ~£60,051
- HICBC: 0.25% × £2,252 = £5.63 repaid (negligible)
- Net child benefit kept: ~£2,246/year
The £10,000 pension contribution recovers roughly £1,120 in child benefit per year — on top of the Corporation Tax saving of approximately £2,350 on the contribution itself. Total saving from the £10,000 contribution: over £3,470/year. That’s 34.7p saved per £1 contributed, just from the tax and benefit interaction.
See how much you’d save at your income level →
Why you should claim even if you earn over £80,000
Many higher-earning contractors opt out of claiming child benefit to avoid the admin of HICBC on their Self Assessment. This is a mistake. Even if you repay 100%, claiming and repaying preserves the lower-earning parent’s National Insurance record.
Child benefit counts as a qualifying year for the state pension — even if it’s fully clawed back. Each qualifying year is worth approximately £329/year in state pension (35 qualifying years needed for the full new state pension at £11,502/year in 2026/27). If the lower-earning partner doesn’t claim, they miss out on NI credits that can only be recovered through paid employment or voluntary contributions.
Always claim child benefit. If you’ll repay it all, you can register to receive it without payment — you get the NI credits without the cash flowing through your account.
The self-assessment requirement
If you or your partner receive child benefit and either of you earns over £60,000, the higher earner must register for Self Assessment and pay the HICBC through their tax return. HMRC does not collect it automatically through PAYE.
For limited company contractors already on Self Assessment, this is just an additional line on your return. If your income drops below £60,000 in a given year (lower billing year, large pension contribution), you don’t owe the charge for that year.
How is this calculated?
Child benefit weekly rates for 2026/27 are set by the Department for Work and Pensions (DWP). The HICBC threshold of £60,000 was introduced in April 2024 (previously £50,000 since 2013). The charge is 1% of benefit per £200 of income above £60,000, fully repaid at £80,000. This is legislated under s.681B–681H of the Income Tax (Earnings and Pensions) Act 2003, as amended by Finance Act 2024. Adjusted net income is calculated under s.58 of the Income Tax Act 2007.
Frequently asked questions
Should I opt out of child benefit if I earn over £80,000?
No — opt to receive it without payment instead. This preserves your lower-earning partner’s NI qualifying years without the cash passing through your account. Contact HMRC or update your child benefit claim online to switch to “not receiving payment.” You can switch back if your income drops below the threshold.
Does it matter which parent earns more?
Yes. The HICBC is charged on the higher earner, regardless of which parent claims child benefit. If you earn £90,000 and your partner earns £30,000 and claims the benefit, you pay the HICBC. If your partner earns £61,000 and you earn £55,000, they pay the HICBC — even though they’re the one claiming.
Does my company’s retained profit count?
No. Adjusted net income is your personal income — salary, dividends, rental income, savings interest. Money sitting in your limited company as retained profit is not personal income until you extract it as salary or dividends. This is one reason why leaving profit in the company and deferring extraction can make sense when you have children.
Can employer pension contributions really bring me under £60,000?
Yes, if the numbers work. A £400/day contractor has total income of around £74,380. To get below £60,000 requires reducing adjusted net income by £14,380 — achievable with a £15,000–£16,000 employer pension contribution. You’d recover around £2,252 in full child benefit (two children) and save approximately £3,500 in Corporation Tax on the contribution. Total benefit from that contribution: roughly £5,750 — on a £15,000 pension contribution that also grows tax-free.
What if I have more than two children?
The same taper applies, but starting from a higher benefit amount. With three children: eldest (£1,355) + two additional (£897 × 2) = £3,149/year. With four children: £4,046/year. The pension strategy becomes even more valuable because you’re recovering more benefit per £200 of income reduced.
Claiming child benefit and earning over £60,000? Use our free High Income Child Benefit Calculator to see exactly what you’re keeping, what you’re losing, and whether a pension contribution would put you ahead.