Missing out on child benefit?

If your income has been affected by the coronavirus pandemic, you may now be entitled to claim child benefit, without having to pay the High Income Child Benefit Charge (HICBC).

If you’re one of the thousands of people in the UK who’ve seen their income fall as a result of the coronavirus pandemic you may be missing out on Child Benefit which is a valuable source of income. 

Child Benefit explained

Households with children under 16 (or 20 if they’re in certain types of education) are eligible to claim Child Benefit. This tax year, parents will be able to claim a Child Benefit payment of £21.05 a week for the first child and £13.95 for subsequent children. This is paid every four weeks1.

Aside from the payment, registering for Child Benefit means you can receive National Insurance (NI) credits towards your state pension if you’re off work and or don’t earn enough to pay NI. You can receive these until your youngest child is 12, and your child/children will automatically get a National Insurance number when they’re 16.

What is High Income Child Benefit Charge?

The High Income Child Benefit Charge was introduced from 7 January 2013.

Since that date, couples living together where one person’s income is £50,000 or over and where a child lives with them, are subject to a specific tax charge if they continue to receive Child Benefit payments. The tax charge is worked out at a rate of one per cent of the Child Benefit money you receive for every £100 you earn over £50,000.  

This means that for anyone earning over £60,000 the payment received through Child Benefit is effectively wiped out by the tax charge. 

However, if you or your partner earns more than £60,000, it is still worth registering for Child Benefit2 (so you qualify for National Insurance credits). You can then stop (or ‘opt out of’) receiving any payments.

What counts as income?

 It’s worth pointing out that you or your partner could earn more than £50,000 and still not have to pay the Child Benefit tax charge. That’s because HM Revenue and Customs looks at what’s called ‘adjusted net income’ when working out the tax charge you have to pay. This is your pay before tax, minus any pension3 contributions deducted from your pay and any Gift Aid charity donations.


Sources:

  1. https://www.gov.uk/child-benefit-payment-dates
  2. https://www.gov.uk/child-benefit-tax-charge
  3. https://www.gov.uk/child-benefit-tax-calculator/main

Will I qualify for Child Benefit if my income has been reduced because of coronavirus?

You may be able to claim Child Benefit again, but it will depend on your income.

For example, if you were earning £60,000 or slightly more and stopped claiming Child Benefit, but have now lost 20 per cent or more of your income under the government’s job retention scheme, your income will fall to £50,000 or below. This means you can once again become eligible to claim this benefit without being liable for the tax charge.

How can I claim Child Benefit?

You can find out more information about claiming Child Benefit on the Gov.uk website.