High income child benefit charge: issues on separation
This page looks at some complications which arise with the high income child benefit charge (HICBC) when a relationship ends.
⚠️ Note: on this page, references to being married include being in a civil partnership and references to a spouse include a civil partner.
What counts as a ‘partner’ for HICBC purposes?
Let’s look at the definition of ‘partner’ a bit more closely.
Two people who are married to each other are treated as ‘partners’ for the HICBC if they are not separated under a court order or separated in circumstances likely to be permanent.
However, you can also be treated as a ‘partner’ of someone else for the purposes of the charge if you are living together as if you are married.
In most cases, it is usually clear whether or not someone is treated as your partner under either of these tests. But determining when someone becomes your ‘partner’ – and when that person may stop being your ‘partner’, can be tricky.
What if I am not married to my partner?
Our relationships are infinitely variable. If you are living together with your partner and you are not married, or not yet married, how can you tell whether you are living together as if you were?
There is no legal definition. This means you have to look at lots of factors, including:
- your sexual relationship,
- financial interdependence,
- stability of your relationship,
- whether or not you have children together,
- public acknowledgement of your relationship (for example, your friends and family might see you as a couple),
- your future plans together.
If you are not married but you are living together with your partner, then you need to determine precisely when your relationship changes to be of a more permanent nature. In other words, you must work out when it would start to be described in terms consistent with that of a married couple.
This can be very problematic, not least because each partner may have different views on the point (and so may HMRC or the courts), but also because it must be assessed on a weekly basis to determine your liability to the HICBC.
If you never marry, then you may need to make the reverse assessment if you later separate: when do you go from ‘living together as a married couple’ to ‘not living together as a married couple’?
On a practical level, if you are living together with someone you would describe as your partner, you might consider your ‘partnership’ for HICBC purposes to commence from the point you move in together and end if and when you then later move out and no longer live in the same household. However, the period may be shorter than that – for example, if you separate but you continue to live under the same roof for financial or practical reasons.
Remember that the test is whether or not you are living together as a married couple. This means that if you are not married and you are not living together, then another person cannot be treated as your partner for HICBC purposes – whatever the nature of your relationship.
When am I treated as separated from my spouse?
If you are married, you will automatically be treated as partners for HICBC purposes unless you are separated. As mentioned above, that separation must be either under a court order or in circumstances likely to be permanent. A court order will be clear enough. But how can you tell whether you have separated in circumstances ‘likely to be permanent’?
Again, this is depends on the facts and circumstances of the case. There is no legal test and the two parties to the relationship, HMRC and the courts may all have a different view.
Practically, you would usually be separated in such circumstances if, as a couple, you both agreed that you were not going to get back together. Where you are not in agreement, HMRC or the courts will need to resort to looking at the available evidence such as whether (or when) one party moved out of the marital home and whether that was a permanent or temporary move. These issues were considered in a 2020 court case, Manku v HMRC  UKFTT 308 (TC).
When do I stop being liable to the HICBC if I separate from my partner?
This can be confusing, because the HICBC is always assessed based on your annual income – even though you may have only had a partner who claimed child benefit for part of the year.
First, you need to work out the date of separation for HICBC purposes (see the above two questions).
Then, in calculating the charge, you need to add up all of the child benefit received by your former partner in respect of the weeks in the tax year you were together – up to and including the week of separation. Note that child benefit is normally paid four-weekly, so you would likely need to include part of a 4-weekly payment. A four-weekly payment is paid in respect of the week of payment and the previous three weeks.
Karl and Gemma were married and had been together for many years. However, they separated on 5 October 2020. Karl’s annual adjusted net income is £55,000 a year; Gemma’s is £25,000. Gemma claims child benefit in respect of their two children and she continues to do so after the separation.
For tax years up to and including 2019/20, Karl is liable to the HICBC. Because his adjusted net income is £55,000, the charge will clawback 50% (£55,000 - £50,000 = £5,000, divided by £100 equals 50) of the child benefit received in respect of the year. Gemma received a total of £1,788.80 in child benefit for 2019/20, so Karl’s HICBC is £894 (rounded down to the nearest pound).
For 2020/21, Karl is also liable to the HICBC based on his adjusted net income of £55,000. However, the child benefit which is used to calculate the charge will be restricted to the amount received for the first half of the year. Gemma received a total of £1,855 for the year (53 weeks in 2020/21). The amount relating to the part of the year Karl and Gemma were together is £945 (27 Mondays). Karl’s HICBC for 2020/21 would therefore be £472.
Note: The HICBC may become payable quite some time after the separation. In this example, unless the charge was collected in-year via PAYE, the HICBC would be due as part of Karl’s 2020/21 Self Assessment balancing payment on 31 January 2022 – some 16 months later. You may wish to bear this in mind if you are agreeing a financial settlement as part of the separation.
I opted out of child benefit payments. Can I backdate the payments after separating?
If, as a couple, you are affected by the HICBC then you may choose to opt out of receiving child benefit payments by completing an online form. You may do this for a number of reasons – for example, in order to avoid the partner with the higher adjusted income having to file a Self Assessment tax return (though they may have to file one in any case), or to avoid the hassle of claiming child benefit only to pay back most or all of it through the HICBC.
Opting out of payments, as opposed to ending the claim altogether, is an important difference as the child benefit claimant would then continue to be entitled to National Insurance credits. This may help them build up entitlement to a UK state pension if they were not entitled to a qualifying year towards their state pension for any other reason.
Once you have opted out, you can restart your child benefit payments – for example, after separating from a higher-income partner who would have been liable to the HICBC.
In certain circumstances, it is possible to backdate the payments for up two tax years. However, strictly speaking the law allows you to do this in the case only where no HICBC would have been payable.
You cannot, therefore, backdate payments after separation if in so doing you would trigger the HICBC on your former partner!
What happens if I get back together with my partner?
First, if you get back together with your partner you should ask whether or not you ever separated for the purposes of the HICBC. If you were married (and perhaps remained so), then it would be necessary for you to have been separated in circumstances likely to be permanent. Therefore, to get back together after this would, by definition, be unlikely. Nevertheless, it is possible, depending on the facts of the case (in fact, this is exactly what happened in the case of Manku v HMRC  UKFTT 308 (TC)).
If you are the higher earner and your (ex-)partner continued to claim child benefit while you were separated, you would again need to determine the precise point (or at least, the precise week) in which they became your partner again so that you can calculate how much child benefit will need to be brought into the HICBC calculation. The amount of child benefit paid for weeks during which you were separated would be ignored.
If you were never married, remember that living together is a requirement for being treated as partners for HICBC purposes. So, if you moved out, you would need to move back in together and then ask yourselves at what point did you recommence living together as a married couple. This is the point from which the child benefit payments would be clawed back via the HICBC.
Where can I find more information?
If you’re interested in the issues which the definition of a ‘partner’ causes in the UK tax system more widely, you may wish to read our 2015 report Couples in the tax and related welfare systems – a call for greater clarity.