93% of families still filing pointless tax returns over child benefit charge, HMRC data shows
Key Points
- 8,840 families used HMRC's new digital PAYE service for the High Income Child Benefit Charge in 2025/26, with 1,239 more signing up by 13 May 2026
- That represents around 7% of the 126,000 taxpayers eligible to switch from Self Assessment to PAYE collection
- The High Income Child Benefit Charge currently applies to households where one earner has adjusted net income above £60,000
- Frozen thresholds and strong wage growth continue to pull more families into the charge each year
- Pension salary sacrifice remains one of the most effective legitimate ways to manage adjusted net income below the threshold
Around 93% of families who could now drop Self Assessment over the child benefit charge are still filing unnecessary tax returns, HMRC figures show.
Wealth manager Quilter obtained the data through a Freedom of Information request.
It showed that 8,840 people used HMRC’s new digital PAYE service for the High Income Child Benefit Charge in the 2025/26 tax year, with a further 1,239 signing up in 2026/27 as at 13 May. That takes the total to just over 10,000 families since the option launched.
A separate set of HMRC figures, also obtained by Quilter, showed that 126,000 taxpayers were in Self Assessment in 2022/23 purely because of the charge, with all income sources made up of employee earnings or pensions.
Those households are, in principle, suitable for PAYE collection in full, meaning only around 7% of the eligible pool has made the switch. The remaining 93% are still completing annual tax returns that the new system aims to replace.
HMRC introduced the PAYE option to spare working parents from filing a return solely to settle the High Income Child Benefit Charge.
The charge currently applies to households where one earner has an adjusted net income above £60,000, having previously kicked in at £50,000 before the government raised the threshold.
Frozen thresholds and strong nominal wage growth continue to draw more families into the charge despite the higher starting point.
HMRC recalculates the charge whenever it receives updated income information, meaning PAYE tax codes can change during the year.
The firm said that makes it harder for parents to identify which code adjustments relate to the charge and which reflect other income changes.
Errors can still arise where HMRC does not hold up-to-date or complete information, particularly where household earnings fluctuate.
“It is laudable that the government has opted to introduce a PAYE-based system for collecting the High Income Child Benefit Charge, and it is understandable that a reform of this nature may take time to bed in,” said Shaun Moore, Tax and Financial Planning Expert at Quilter.
“However, the low take-up so far suggests that awareness remains limited and that many families simply do not realise an alternative to Self Assessment now exists. As a result, people may be continuing to file tax returns unnecessarily.”
Moore said the issue is likely to grow rather than fade, with frozen thresholds drawing in more households each year, including many for whom the policy was never originally designed.
He added that pension salary sacrifice remains one of the most effective ways for families close to the threshold to manage adjusted net income and protect entitlement.
“But with more households likely to be affected in future, improving awareness of how the charge works and how it can be managed is becoming increasingly important,” he said.
