HMRC announces PAYE option for child benefit repayments
On 23 September 2025, HMRC announced a new, more streamlined process for managing the High Income Child Benefit Charge (HICBC). This development represents a key shift for payroll teams, as affected employees will now be able to manage repayments directly through their PAYE tax code - reducing reliance on the Self Assessment system.
What’s the HICBC?
The High Income Child Benefit Charge applies where a parent or partner earns over £60,000 per year and receives Child Benefit. Until now, those affected had to repay part or all of their Child Benefit through Self Assessment, even if they had no other reason to file a return. This often creates unnecessary admin for employees and confusion for payroll teams supporting them.
What’s changing?
Under the new system, eligible employees can opt in to have their HICBC repayments automatically collected through their PAYE code. HMRC will update the code so the repayment is spread evenly throughout the year, in the same way as income tax or student loan deductions.
This change means:
- Employees won’t need to complete a Self Assessment return solely for the HICBC.
- Deductions will appear on payslips and be processed automatically through payroll.
- There’s less risk of employees facing unexpected, one-off bills at year-end.
Who can opt in
Employees can use the new method if they:
- Are employed and paid via PAYE; and
- Have no other reason to complete a Self Assessment tax return (e.g., no self-employment or rental income).
Those who still need to complete a tax return for other reasons will continue to settle their HICBC via Self Assessment.
Key deadlines for employers and employees
To use the PAYE system for the 2024–25 tax year, affected employees must register with HMRC by 31 January 2026. HMRC will then issue the appropriate tax code adjustments to employers for automatic payroll collection.
Payroll teams should be alert to any code changes from HMRC relating to HICBC and ensure these are processed correctly.
Supporting smoother payroll operations
This change aligns with HMRC’s wider goal of modernising tax administration - reducing paperwork and helping taxpayers manage obligations more efficiently. For payroll teams, it simplifies compliance, reduces queries from employees about Self Assessment, and supports smoother year-end processing.
We’re here to help
Our specialist payroll services team can help employers navigate this transition, ensuring your systems and communications are ready for the change.
In addition, our employment tax specialists are available to advise employers on complex cases or ensure your organisation’s approach remains tax compliant and efficient and employers fully understand all their employment tax obligations.
For individuals remaining in the Self Assessment regime, our Private Client team can support you with the filing process.
Get in touch via the form below to discuss any assistance you may require.