6 January 2026
PRESS RELEASE
HMRC reveals fiscal drag to push 35,000 more families into the Child Benefit tax charge
New information obtained by Quilter, the wealth manager and financial adviser, under the Freedom of Information Act shows that fiscal drag is set to pull tens of thousands more families into the High Income Child Benefit Charge (HICBC) over the next three years, steadily eroding the value of government support for families with children.
HMRC’s official forecasts show that the number of families liable for HICBC will rise from 324,000 in 2025–26 to 359,000 in 2028–29. The projected increase of roughly 35,000 reflects the drag of frozen tax thresholds and static benefit parameters against rising nominal incomes.
Most affected families are expected to be in the tapering range of liability, between £60,000 and £80,000 meaning they will repay a proportion of their Child Benefit rather than the full amount. HMRC forecasts that:
- 213,000 families will be in the HICBC taper in 2025–26, rising to 246,000 by 2028–29
- 111,000+ families each year will be repaying Child Benefit in full
These figures highlight how frozen thresholds are inadvertently increasing the net tax burden on working parents and reducing the real value of support intended to help families with the costs of bringing up children.
The same FOI also reveals that HMRC does not hold data on how many taxpayers earning above £100,000 have children, limiting policymakers’ ability to understand the full impact of threshold freezes on family finances. Once one member of a household with children earns over £100,000 they lose access to the tax-free childcare scheme and valuable funded childcare hours which means they are no longer eligible for 30 hours of funded childcare per week during term time.
In the FOI, HMRC admitted it does not hold comprehensive data showing how many taxpayers who earn above £100,000 are responsible for children. Child responsibility information is only collected in limited circumstances, such as during Tax-Free Childcare applications or where someone is already liable for HICBC.
Shaun Moore, tax and financial planning expert at Quilter, comments:
“Our FOI shows that tens of thousands more families will be pulled into the High Income Child Benefit Charge over the coming years purely because frozen thresholds let inflation and nominal earnings shifts do the work of tax increases. Families may not be better off in real terms, but more and more of them will see support withdrawn as a result.
“The data shows that each successive year more parents will be subject to clawbacks of Child Benefit that eat into household budgets at a time when costs of living remain high.”
“It is also worrying that HMRC cannot say how many higher earners have children, because it means the Government lacks full visibility of who faces these financial cliff edges. As more families cross into higher income brackets in name alone, policymakers are effectively taking a shot in the dark on a key piece of family finances.”
“Together with the rising HICBC caseload, this lack of data shows how fiscal drag is reshaping support for parents. A comprehensive review of how family benefits interact with income policy is needed so that support keeps pace with economic reality.”
