HM Revenue and Customs (HMRC) has issued a warning to UK parents, urging them to check if they are missing out on Child Benefit. According to the agency, those earning under £80,000 annually may be eligible for additional financial support.
As reported by DevonLive, recent changes to the High Income Child Benefit Charge now allow more families to claim without facing penalties. This could be a significant opportunity for many parents to benefit from the scheme.
What is Child Benefit?
Child Benefit is a government scheme aimed at supporting parents with children under the age of 16, or up to 20 if the child is in education or training. Importantly, there is no cap on the number of children for whom claims can be made, making it an accessible option for families of all sizes.
Eligible families can receive £25.60 per week for their eldest child, and £16.96 per week for each additional child. This equates to an annual total of £1,331.20 for one child and £2,212.60 for two children.
As of recent data, six million families in the UK are benefiting from Child Benefit. Beyond the direct financial aid, the benefit also provides National Insurance credits, which may help enhance a parent’s State Pension.
For those who do not receive National Insurance credits through employment, this can be a crucial means of ensuring they build enough credits to eventually claim the State Pension, especially for those who are not in paid work.
High-Income Child Benefit Charge
However, the system introduces complexities for higher earners. If a parent or their partner’s income exceeds £60,000 per year, they will incur a High Income Child Benefit Charge.
This charge continues to apply until the household income surpasses £80,000, at which point the entire benefit amount must be repaid. For many, this effectively nullifies the benefit unless they are unemployed and rely on it solely for the National Insurance (NI) credits it provides.
The update from HMRC on X (formerly Twitter) made this point clear, saying :
Parents! If you earn under 80k, you could be missing out on cash. The amount you or your partner can earn before you start paying the High Income Child Benefit Charge has increased to £60k.
How to Apply for Child Benefit
To apply for Child Benefit, families will need several documents, including National Insurance numbers for both the applicant and their partner (if applicable), as well as bank account details.
Parents must also provide original birth or adoption certificates and passports or travel documents for children born outside the UK.
Additionally, a child’s birth or adoption certificate is required. Applications can be made 48 hours after the child’s birth registration or when the child comes to live with the family. Claims can also be backdated for up to three months after the child’s birth registration.
It’s important to note that only one parent can receive the benefit for a child, as the National Insurance credits are tied to the claimant.
Financial Impact for Parents
Families benefiting from Child Benefit could receive substantial support. The total annual amount for one child is £1,331.20, and for two children, it comes to £2,212.60.
However, this support is not without its considerations for high-income earners. The High Income Child Benefit Charge becomes applicable once a household’s income exceeds £60,000, and parents earning more than £80,000 annually will lose their benefit entirely.
Nevertheless, the National Insurance credits associated with Child Benefit could be of significant value, especially for parents not in paid employment.
These credits are crucial in helping to ensure a sufficient record for claiming the State Pension, with 10 years of credits required to qualify for the basic pension and 35 years to receive the full pension.
Special Considerations
Applications for Child Benefit can be submitted online via GOV.UK, where a form will be provided to complete. However, in certain circumstances, applicants may need to print and post the completed form to HMRC along with supporting documents.
In conclusion, while Child Benefit remains a vital form of financial support for many families, parents earning under £80,000 should be aware of how recent updates to the High Income Child Benefit Charge could allow them to continue claiming without penalty.
High-income earners should be mindful of the charges that come into play once they surpass £60,000 in household income. Ultimately, understanding the implications of this benefit and how it affects National Insurance credits could be crucial for parents planning for their future.