Step-by-step guide: Dealing with HMRC’s High-Income Child Benefit letter
Got a letter from HMRC asking you to check if you owe the High-Income Child Benefit Charge (HICBC)? You’re not the only one. These “nudge” letters are HMRC’s gentle reminder to taxpayers who might not know they fall within the rules for this particular charge.
In this post, we’ll look at what the letter means, why it may have landed in your mailbox, what to do next, and when it’s best to get professional help from an accountant.
What exactly does HMRC say about nudge letters?
HMRC uses what are called “one-to-many” letters (often referred to simply as “nudge” letters) to prompt a certain group of taxpayers to review their position. They are not formal investigations but are designed to encourage compliance.
In the case of the High-Income Child Benefit Charge, the guidance published on the government site states that you or your partner may have to pay the charge if both of the following apply:
- You (or your partner) receive Child Benefit payments.
- Your adjusted net income (ANI) for the tax years in question is over the threshold. From 6 April 2024, the threshold for the High-Income Child Benefit Charge increases to £60,000, starting with the 2024–25 tax year and continuing after that.
- HMRC’s letter often says something like this: please check if you need to pay the High-Income Child Benefit Charge; we understand tax isn’t always straightforward, and it’s easy to miss; here’s a simple flowchart to help you figure it out; our records suggest you could be affected; and here’s how you can pay or sign up for the service.
The letter also explains you may have the option to pay the charge through your tax code (via PAYE) rather than having to register for Self Assessment — provided certain conditions are met.
What prompted HMRC to send you a nudge letter?
There are a few likely reasons you may have received this nudge letter:
- HMRC’s records show your adjusted net income (ANI) is over the current threshold of £60,000 for 2024-25 (or will be for 2025-26) and you or your partner are receiving Child Benefit.
- HMRC are stepping up enforcement efforts using one-to-many letters to address widespread under-compliance in “routine” tax areas, including HICBC.
- You are on a PAYE payroll scheme and HMRC believes you might prefer the option of collection via the tax code rather than Self Assessment. The letter gives this option.
The “why” is really about efficiency. HMRC can send “nudge” letters at scale rather than opening a full formal enquiry in each case. They hope that affected taxpayers will act promptly and resolve the matter themselves.
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What should you do if you receive a nudge letter?
Receiving the letter does not mean HMRC have formally opened an enquiry — but it should not be ignored. Here’s what you ought to do:
- Check whether you (or your partner) receive Child Benefit payments. If no one in your household is receiving Child Benefit, the HICBC will not apply.
- Calculate your adjusted net income (ANI). This is your total taxable income before certain allowances, including things like savings interest and dividends. “Adjusted net income” is used by HMRC to determine whether you pass the threshold.
- See if your ANI for the tax years 2024-25 and/or 2025-26 is £60,000 or more. If yes, you may be liable for the HICBC.
- Decide how to pay the charge. If you’re employed and paid through PAYE, and you don’t normally submit a Self Assessment tax return — for example, because you don’t earn anything beyond your salary — you can now ask HMRC to take the charge directly from your pay via your tax code. The letter explains how to do this, and it’s a pretty straightforward process.
- If you can’t use that option, maybe because you have already filed a Self Assessment, then you’ll need to stick with that. Register, complete your return, and make the payment by 31 January after the end of the tax year — 31 January 2026 for 2024–25, or 31 January 2027 for 2025–26. The letter also mentions that missing deadlines can lead to penalties.
- If you think you’ve received the letter by mistake, don’t just toss it aside. It’s not a demand — more a reminder to check that everything adds up. But if you discover you are liable then it is better to act rather than ignoring. One client case resulted in a taxpayer having to sell the family home after failing to engage with HMRC when a nudge letter was sent.
In short: don’t panic, but do take the letter seriously, check your position, and arrange to pay or correct the position if necessary.
How can an accountant help?
An accountant brings three key advantages:
- Clarity over your income and ANI calculations: Many taxpayers don’t fully understand how adjusted net income is calculated and whether specific items (such as dividends, savings interest, taxable benefits) push them over the threshold. An accountant can clarify this for you.
- Advice on whether to use PAYE code collection or Self Assessment: Depending on your overall income — whether that’s from salary, savings, dividends or other sources — your accountant can help you figure out which payment route suits you best and guide you through the correct HMRC process.
- Liability review and planning the next steps: If you discover you are likely liable for HICBC, your accountant can ensure your return is correct, that any payment arrangements are made in time, and help you avoid unwanted penalties or interest. They can also assess whether opting out of receiving Child Benefit and avoiding the charge makes sense for your family situation (bearing in mind the National Insurance credits that Child Benefit can provide).
If you already have an accountant, it makes sense to bring the letter to their attention as soon as possible. If you don’t, then this might be a prompt to engage, given the potential tax, planning and risk implications.
Conclusion
In short, HMRC’s nudge letter regarding the High-Income Child Benefit Charge is a “friendly but firm” reminder that you might have overlooked a tax charge. It doesn’t mean you’re under formal enquiry, but it does mean you should check whether you or your partner are receiving Child Benefit and whether your adjusted net income exceeds the relevant threshold for the tax years 2024-25 and 2025-26 (namely £60,000). If you are liable, you’ll need to work out whether to pay via your tax code (PAYE) or through Self Assessment, act in time, or engage an accountant if things are complex. Taking early action will reduce risk, avoid penalties and give you peace of mind.
Author
Mukund is a founding member of the Affinity Associates Group and has been with the practice for nearly 40 years. After completing his degree in Accounting and Finance, he went on to qualify with both ACCA and ICAEW in 1991. Over the years, he’s built deep expertise in consultancy, tax, business development, and corporate group structures. Mukund is known for helping clients make sense of complex financial challenges and turning them into opportunities for sustainable growth.
