UK HICBC Planning + Mitigation Strategies 2026/27
HICBC planning 2026/27: how the £60,000-£80,000 taper works, and how pension contributions, Gift Aid and opting out of Child Benefit payments change it.
The High Income Child Benefit Charge claws back Child Benefit once one partner's adjusted net income passes £60,000: 1% for every £200 above it, all of it at £80,000. Anything that lowers adjusted net income lowers the charge. The main levers are pension contributions and Gift Aid; the main alternative is to keep the claim but opt out of payments.
How the charge is worked out
| Adjusted net income | Share of Child Benefit repaid | Charge, two children |
|---|---|---|
| £60,000 | 0% | £0 |
| £65,000 | 25% | £584 |
| £70,000 | 50% | £1,168 |
| £75,000 | 75% | £1,752 |
| £80,000 | 100% | £2,337 |
Two children receive £2,337.40 a year at the 2026/27 rates. Under ITEPA 2003 s.681C(3) the benefit total, the percentage and the charge are each rounded down to whole numbers.
Worked example: salary sacrifice on £65,000
England, two children, 2026/27 rates, computed with our salary engine.
| No sacrifice | Sacrifice £5,000 | |
|---|---|---|
| Income Tax | £13,432 | £11,432 |
| Employee NI | £3,311 | £3,211 |
| HICBC | £584 | £0 |
| Paid into pension | £0 | £5,000 |
The £5,000 pension contribution costs £2,316 of take-home pay. Below the higher-rate threshold (£50,270) the Income Tax saving drops to the basic rate, so the HICBC saving is most valuable for income between £60,000 and £80,000.
Before 5 April each year
- Estimate adjusted net income, including bonuses, benefits in kind, savings interest and dividends.
- If you are in the £60,000-£80,000 band, consider a pension contribution or Gift Aid before the tax year ends.
- If you will be over £80,000, decide whether to opt out of payments. Keep the claim for the National Insurance credits.
- Choose how to pay: through your PAYE tax code, or through Self Assessment if you file a return anyway.
Model your own figures with the HICBC calculator.
Frequently asked questions
How does the High Income Child Benefit Charge work in 2026/27?
The charge is in ITEPA 2003 ss.681B-681H, inserted by Finance Act 2012 s.8 and Schedule 1. If your adjusted net income is over £60,000, you pay back 1% of the Child Benefit for every £200 above it, and at £80,000 or more you pay it all back. Child Benefit for 2026/27 is £27.05 a week for the eldest or only child and £17.90 for each other child, so two children get £2,337.40 over 52 weeks. Where both partners are over the threshold, the one with the higher adjusted net income pays. The test is individual, not household: two partners on £60,000 each pay nothing, while one on £80,000 repays the lot.
Can pension salary sacrifice remove the HICBC?
Yes, because salary given up never becomes taxable income, so it lowers adjusted net income. On a £65,000 salary in England with two children, sacrificing £5,000 brings adjusted net income to £60,000. Our salary engine shows Income Tax down £2,000, employee NI down £100 (that slice of pay is above the Upper Earnings Limit, where employee NI is 2%) and the HICBC down £584. The £5,000 in the pension costs £2,316 of take-home pay. The employer also saves £750 of employer NI, which it may or may not pass on. From April 2029 only the first £2,000 a year of sacrificed pension contributions will be free of NI; the Income Tax and adjusted net income effect is unchanged.
Does Gift Aid reduce the HICBC?
Yes. Adjusted net income is reduced by the grossed-up donation: £1.25 for every £1 you give. A higher-rate taxpayer on £70,000 who donates £8,000 makes a gross gift of £10,000, bringing adjusted net income to £60,000. The charity claims the basic-rate tax; you claim the extra 20% (£2,000) through Self Assessment; and the HICBC for two children falls by £1,168. The donation costs you £4,832 net. Under ITA 2007 s.426 you can elect, in the return for the earlier year, to treat donations made before you file it as paid in that earlier year, which helps if you crossed £60,000 unexpectedly.
Does moving income to a partner reduce the HICBC?
It can, because the charge looks only at the higher earner's own adjusted net income. Assets can pass between spouses or civil partners who live together with no Capital Gains Tax (TCGA 1992 s.58), and income from the transferred asset is then theirs. For jointly held property, income is split equally between spouses by default (ITA 2007 s.836) unless you own it unequally and make an election. The transfer must be a genuine outright gift. If you are unmarried partners, s.58 does not apply and a transfer can trigger Capital Gains Tax.
Can deferring or sacrificing a bonus avoid the HICBC?
A bonus counts in full towards adjusted net income in the tax year it is paid. If your salary is already over £80,000, only bringing income back below that figure reduces the charge, and only getting it to £60,000 or less removes it. A bonus sacrificed into a pension before it is paid does not count as income. Moving the payment date into the next tax year needs your employer's agreement and only helps if your income in that year is lower.
Should I claim Child Benefit but opt out of payments?
If you would repay all of it, opting out of payments avoids the charge but keeps the claim in place. You still get National Insurance credits towards the State Pension if your child is under 12, and your child is given a National Insurance number before 16 without applying. You can restart payments at any time, for example if your income falls. A year of credits matters: with 35 qualifying years needed for the full new State Pension of £241.30 a week, each year is worth about £359 a year of pension, and buying a missed year with voluntary Class 3 contributions at £18.40 a week costs about £957. You must still pay any charge due for the time before payments stopped.
How does Marriage Allowance fit with HICBC planning?
Mostly it does not. Marriage Allowance lets a spouse or civil partner with income below the Personal Allowance pass £1,260 of it to a partner who pays only basic-rate tax, saving up to £252 a year. The recipient must not pay higher-rate tax, which in England, Wales and Northern Ireland means income of no more than £50,270. Since that is below the £60,000 point where HICBC starts, a couple who can use Marriage Allowance has no HICBC to plan around, and a couple paying HICBC cannot use Marriage Allowance. A claim can be backdated up to four earlier tax years in which you were eligible.
What counts towards adjusted net income?
Your total taxable income before Personal Allowances: salary and taxable benefits in kind, self-employed profits, most pensions, taxable rental income, and all savings interest and dividends, including the parts covered by the Personal Savings Allowance and the dividend allowance. Then take off trading losses, gross pension contributions made without tax relief, the grossed-up value of relief-at-source pension contributions and the grossed-up value of Gift Aid donations. Salary sacrificed before payment is not in it at all.
Do I need a Self Assessment return to pay the HICBC?
Not necessarily. Employees and pensioners who do not need a return for another reason can pay the charge through their PAYE tax code, using HMRC's online service, if they register by 31 January after the end of the tax year. Otherwise you register for Self Assessment by 5 October after the tax year and pay through your return. Anyone already filing a return, for example because they are self-employed, pays through Self Assessment.
Does the HICBC affect Tax-Free Childcare?
No, but Tax-Free Childcare has its own limit: you cannot get it if you or your partner expect adjusted net income over £100,000 in the tax year. It adds £2 for every £8 you pay in, up to £2,000 a year per child (£4,000 if disabled), and you must reconfirm eligibility every 3 months. Pension contributions and Gift Aid reduce adjusted net income for this test too.