Dividends and the child benefit clawback
When the clawback starts and how to plan around it
Dividends count towards adjusted net income, so a dividend decision can quietly trigger the High Income Child Benefit Charge.
Where the line sits
The clawback starts at £60,000 of adjusted net income and takes all the child benefit by £80,000. A director on the standard £12,570 salary who takes £50,000 of dividends has income of £62,570: this takes them over the line, and the charge begins.
Planning around it
You control the dividend tap. Options include timing dividends across tax years, using a spouse's shareholding, so income is split between you, and employer pension contributions, which reduce the company's tax bill without adding to your adjusted net income. We can help you model the position before any large dividend.
💡 Good to know: Tell us at onboarding if your household receives child benefit. It changes the dividend plan we recommend, sometimes significantly. Keeping us up to date with life events, such as the birth of a new child, helps us to advise you more accurately.
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