Child Benefit overpayment tax rules clarified

by Aitch, posted in General

A new measure introduced as part of the recent Budget will allow High Income Child Benefit Charge (HICBC) payments to be offset against Child Benefit overpayments relating to the same period. This will avoid individuals having to repay the overpaid Child Benefit and separately claim a refund of the HICBC paid on it.

The HICBC applies where the Child Benefit recipient or their partner has adjusted net income of £60,000 or more. The charge increases by 1% of the Child Benefit received for every £200 of income above £60,000, reaching 100% where income is £80,000 or more.

Currently, where a Child Benefit overpayment is identified after HICBC has already been paid for the relevant period, HMRC must recover the overpayment separately. The individual who paid the HICBC must then make a separate claim for a refund. Under the new rules, HMRC will be able to offset the HICBC paid against the Child Benefit overpayment. If the tax charge does not cover the full overpayment, the remaining balance will still need to be repaid.

The change will take effect on Royal Assent to Finance Bill 2026-27 and will apply retrospectively from the introduction of the HICBC in January 2013. It will therefore cover relevant overpayments arising since the charge was introduced.

Source:HM Treasury | 09-11-2026
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Aitch
I'm Aitch, the Founder and CEO of CIGMA Accounting Ltd. As a Chartered Management Accountant and as a CIMA member, I've spent more than 16 years helping businesses, entrepreneurs, landlords, and individuals with tax planning, accounting, and HMRC compliance. As a chartered accountant in London, I'm passionate about making complex tax matters easier to understand and helping clients make confident financial decisions. Over the years, I've advised start-ups, SMEs, established companies, and high-net-worth individuals across a wide range of tax and accounting matters. My expertise includes Corporation Tax, Self-Assessment, Capital Gains Tax, Inheritance Tax planning, R&D tax relief, capital allowances, international tax, and resolving complex HMRC compliance issues. Whether clients need a business accountant, tax accountant, or strategic tax advisor, my focus is always on delivering practical advice that creates long-term value. One of my specialist areas is Making Tax Digital (MTD). I've worked extensively with businesses preparing HMRC's digital reporting requirements, helping them move to cloud accounting, improve financial processes, and adopt technology that makes compliance more efficient. I regularly speak at Making Tax Digital roadshows, industry events, and educational sessions in collaboration with Zoho Books, sharing practical insights into digital accounting, tax legislation, and the future of the profession. Many business owners looking for the best accounting firm in London are not simply searching for an accountant they're looking for trusted advice, responsive support, and long-term value. That's the approach I've taken in building CIGMA Accounting. My team and I work closely with businesses across London and the UK, providing accounting services, tax advisory, bookkeeping, payroll, VAT, company accounts, and strategic tax planning tailored to each client's goals. Through this website, I share practical guidance on UK taxation, Making Tax Digital, HMRC updates, Corporation Tax, Self-Assessment, and business finance. My aim is to provide reliable, straightforward information that helps business owners understand changing regulations, reduce compliance risks, and make informed financial decisions with confidence.
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