UK’s HM Revenue and Customs (HMRC) has issued a major warning to families across the country, confirming that thousands of parents could lose their Child Benefit payments from September 2025. The announcement has caused widespread concern, as Child Benefit remains one of the most important forms of financial support for families raising children.
This development comes at a time when the cost of living crisis continues to squeeze household budgets, leaving many parents worried about how they will manage without this monthly income. In this detailed guide, we explain why HMRC is making these changes, who will be affected, and what steps parents can take to protect their entitlement.
What Is Child Benefit?
Child Benefit is a payment made by HMRC to parents or guardians who are responsible for raising children. It is designed to provide extra support with the costs of food, clothing, and other essentials.
As of 2025, the Child Benefit rates are:
- £25.60 per week for the eldest or only child.
- £16.95 per week for each additional child.
That means a family with two children receives around £2,210 per year in Child Benefit, making it a crucial part of many households’ budgets.
Why Are Parents Losing Child Benefit?
The issue comes down to the High Income Child Benefit Charge (HICBC). Introduced in 2013, the charge reduces or removes Child Benefit from families where one parent earns above a certain threshold.
From September 2025, HMRC will be tightening enforcement of this rule, meaning more families than ever will see their Child Benefit reduced or stopped altogether.
Key points include:
- Parents with an individual income above £60,000 may lose Child Benefit completely.
- Parents earning between £50,000 and £60,000 face a tapered reduction, losing a percentage of their Child Benefit based on how far over the threshold their income is.
- HMRC is increasing its use of bank checks, tax return cross-checks, and data sharing to catch families who haven’t reported their income accurately.
How the High Income Child Benefit Charge Works
To understand why thousands of parents are affected, it’s important to see how the HICBC system works:
- If one parent’s income is £50,100, they lose 1% of their Child Benefit.
- At £55,000, half of their Child Benefit is clawed back through taxation.
- At £60,000 or more, all of their Child Benefit is effectively lost.
Even if the lower-earning parent is the one claiming the benefit, HMRC applies the charge to the highest earner in the household.
Who Will Be Affected in September 2025?
HMRC has warned that enforcement will begin in earnest in September 2025, affecting thousands of families who may not even realise they are liable. Groups at risk include:
- Families where one parent’s salary has recently risen above £50,000.
- Parents who receive large bonuses, overtime pay, or dividends.
- Households where income is unevenly split – for example, one parent earns £65,000 while the other earns £20,000.
- Parents who failed to complete a Self-Assessment tax return to declare their Child Benefit charge.
Why HMRC Is Taking Action Now
The government says the crackdown is necessary because non-compliance has been widespread. Many parents continued receiving Child Benefit without realising they needed to repay some or all of it through taxation.
HMRC estimates that tens of thousands of families owe repayments, with millions lost to under-reported income. By using new digital tools and stronger enforcement, HMRC aims to reclaim unpaid tax and reduce benefit overpayments.
Impact on Families During the Cost of Living Crisis
Losing Child Benefit is a serious financial blow, particularly at a time when household costs are rising.
For example:
- A family with two children stands to lose more than £2,200 a year.
- For families with three children, the loss could exceed £3,000 annually.
- This comes on top of rising mortgage rates, energy bills, and food costs.
Charities warn that the sudden loss of Child Benefit could push some families into financial hardship, particularly middle-income households who do not qualify for other types of support.
What Parents Can Do to Avoid Losing Out
Parents affected by the High Income Child Benefit Charge still have choices. Steps include:
- Check your income: If you are close to the £50,000 threshold, consider whether pension contributions, salary sacrifice schemes, or charitable donations could reduce your taxable income.
- Complete a Self-Assessment: If your income is over the threshold, you must file a tax return each year to pay the charge. Failure to do so may lead to fines.
- Re-evaluate who claims Child Benefit: Even if you stop receiving payments, continuing to claim helps protect your National Insurance record, which is vital for building up your State Pension.
- Plan for bonuses or overtime: A one-off payment could push your income above the limit, so calculate carefully.
What Happens If You Ignore the Warning?
If parents continue receiving Child Benefit but fail to declare income above £50,000, HMRC can:
- Demand repayment of all overpaid benefit.
- Impose penalties and interest on unpaid tax.
- Investigate further financial activity.
In serious cases, this could lead to enforcement action and damage to your credit record.
Critics Call the System “Unfair”
The High Income Child Benefit Charge has long been controversial. Critics argue that it unfairly targets single-income households. For example:
- A household where one parent earns £65,000 loses all Child Benefit.
- But a household where both parents earn £49,000 each – totalling nearly £100,000 – keeps the full benefit.
This creates a sense of injustice for families where one parent shoulders most of the financial responsibility. Campaigners have repeatedly called on the government to review the system, but so far, no major reforms have been announced.
Government Response
The government defends the policy, saying it ensures that support is targeted towards families who need it most. Ministers also argue that parents who lose Child Benefit still benefit from higher overall incomes.
However, with the growing number of families caught in the trap, pressure is mounting on the government to reconsider the thresholds, which have not risen in line with inflation or wage growth.
Preparing for September 2025
With the enforcement date fast approaching, parents are urged to act now. Practical steps include:
- Logging in to your HMRC online account to check your Child Benefit status.
- Speaking to an accountant or tax adviser if your income is near the threshold.
- Using HMRC’s online Child Benefit tax calculator to estimate how much you may need to repay.
- Considering whether to opt out of payments to avoid future charges.
FAQs
Q: Will Child Benefit stop automatically in September 2025?
A: No, HMRC will not automatically stop payments. However, if your income is above the threshold, you may be asked to repay through Self-Assessment.
Q: Do both parents’ incomes count towards the limit?
A: No, only the highest earner’s income is considered, even if the other parent earns less.
Q: Should I stop claiming Child Benefit if my income is above £60,000?
A: Not necessarily. It’s still worth claiming to protect your National Insurance record, but you may choose to opt out of payments.
Q: What if I earn £50,500 – will I lose everything?
A: No, you’ll only lose 1% of your Child Benefit for every £100 over £50,000. The full loss applies at £60,000+.
Q: Could the threshold change in the future?
A: Campaigners are pushing for reform, but as of September 2025, the threshold remains fixed at £50,000.
Final Thoughts
The HMRC’s warning about thousands of parents losing Child Benefit in September 2025 highlights the growing importance of understanding the High Income Child Benefit Charge. While the system is designed to ensure fairness, many families will feel the strain of losing up to £2,000–£3,000 a year in support.
Parents should take proactive steps now to check their income, file tax returns on time, and consider financial planning strategies. With the right preparation, families can avoid unexpected penalties and ensure they are making the most of the support available.