Mark Brewer Senior Partner

Between 2012 and 2019 the number of families receiving Child Benefit reduced by 700,000. Yet many of those not receiving it may in fact be eligible. Are you among them?

Who is eligible to receive it?You normally qualify if you are responsible for a child under 16 (or under 20 if they stay in approved education or training). A claim is not means tested nor is the benefit in itself taxable income, but amounts received may have to be paid back in tax if your income exceeds a certain level.

How much is at stake?Currently, the annual amount for a first child is £1,094.60 and then £725.40 extra for each subsequent child.

I didn't think I could claim it if I had high earnings?High earnings don’t hinder anyone from claiming Child Benefit. It is recommended that everyone who is eligible does claim, as this can entitle you to National Insurance credits that count towards a State Pension.

What about the High Income Child Benefit Charge?The High Income Child Benefit Charge was introduced in 2013. This applies to the higher earner of a couple that receive Child Benefit, if they earn over £50k per annum. If earnings are over £60k, all of the Child Benefit received has to be paid back as a tax charge.

If income is between £50-60k, some of it must be paid back. Note that this is based on the income of the higher earner – a couple earning up to £50k each would not have to pay the charge at all.

What does all this mean for me?The recommendation is that if you are eligible to claim Child Benefit, it is best to do so. You can claim but then opt out of receiving payments, if you do not wish to pay the High Income Child Benefit Charge. One advantage of claiming is the National Insurance credits as stated above, the other is that if your income falls below £60k, you can immediately apply to start receiving payments.

It is not possible to be worse off by claiming or even receiving Child Benefit – the worst that can happen is that you have to pay it all back. Remember that if the income of the higher earner is between £50-60k, not all of it is lost.

Change of circumstances?It may be that your income was higher in previous years and you didn’t think it was worth putting in a claim because of the High Income Child Benefit Charge. It would be well worthwhile to review the situation in the light of your current income, especially if you were previously an employee or partner and are now a shareholder/director in a Limited Company and receiving a more tax efficient remuneration.

How do I claim?The link below is the starting point for making a claim. We are not experts in the field of claiming benefits, so cannot give detailed advice on this aspect, but please do contact us if you have any questions on the High Income Child Benefit Charge and how it might (or might not) affect you.
https://www.gov.uk/child-benefit/how-to-claim