Separating couples – importance of checking your child benefit

Child benefit is one of those financial areas that often gets overlooked during relationship breakdowns, yet it carries real implications for your tax position. If you’re separating or divorcing, reviewing your child benefit arrangements should be on your to-do list—alongside the more pressing matters of property and custody. We’ve helped several clients in Worcester and the surrounding area navigate this exact issue, so we thought it worth sharing some practical guidance.

What happens to child benefit when you separate?

When a couple separates, child benefit doesn’t automatically transfer or split between parents. Instead, it remains with whoever was receiving it beforehand, unless you actively change the arrangement. This is straightforward when one parent has clear primary care, but becomes more complex in shared arrangements.

Child benefit is paid to the person responsible for the child (or children) on a day-to-day basis. In most cases, that’s the parent with whom the child lives for the majority of the time. However, you’re not obliged to stick with existing arrangements once a relationship ends. If care is genuinely shared 50/50, you could request that child benefit be split between you—though HM Revenue & Customs (HMRC) handles this on a case-by-case basis and the process isn’t automatic.

The High Income Child Benefit Charge

Here’s where things get important from a tax perspective. If your household income exceeds £50,000 per tax year, you’ll face the High Income Child Benefit Charge (often called the “benefit tax”). This applies even if you’re only claiming child benefit for one child.

The charge works like this: if your adjusted net income is between £50,000 and £60,000, you’ll pay back 1% of the child benefit received for every £100 of income above £50,000. Once income reaches £60,000 or more, you’ll repay the entire amount of child benefit received.

Here’s the crucial bit for separating couples: if previously both of you were receiving child benefit and your household income stayed below the threshold, you might now find that one partner’s individual income triggers the charge. Conversely, if you were previously paying the charge as a couple, splitting your household might bring you below the threshold—meaning you’d stop paying it.

This needs careful calculation, particularly if one partner has substantial self-employment income or investment returns that aren’t immediately obvious.

Self-assessment and the Child Benefit Charge

If the High Income Child Benefit Charge applies to you, HMRC will usually collect it through your Self Assessment tax bill. This is critical: you can’t ignore it by simply not claiming child benefit. Once HMRC knows you’ve received it, they’ll pursue the charge regardless.

Some separating couples we’ve worked with have assumed they can avoid the charge by not registering for child benefit, but this is a false economy. You’re entitled to claim it, and doing so is often worthwhile—you just need to account for the charge in your tax return.

For the 2024/25 tax year, it’s worth noting that the threshold at which the charge begins has remained at £50,000, despite wider earnings inflation. This means more families are caught by it than in previous years.

Taking action now

If you’re separating, we’d suggest:

Contact HMRC directly to notify them of your changed circumstances. They can advise whether your arrangement is optimised from a child benefit perspective.

Review your income projections. If you’re both higher earners, it might make sense for the lower-earning partner to claim child benefit, avoiding (or reducing) the charge entirely.

Factor it into financial settlements. Child benefit implications should be considered alongside maintenance, property division, and other financial matters. The tax position can be worth several hundred pounds per year, so it’s worth getting right.

Keep records. Once separated, clarity over care arrangements becomes even more important. Document how much time children spend with each parent, as this will support any claims or challenges from HMRC.

Moving forward

Separating is stressful enough without tax complications catching you unawares months later. Child benefit is often overlooked in the immediate aftermath of a split, but it’s worth a small amount of attention now to avoid problems later.

For tailored advice, contact Severn Accounting—we’re here to help.