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What is Child Benefit and who can claim it?
Child Benefit is a benefit which you are entitled to if you are bringing up a child or children under 16 or under 20 if they are still at school or further education college. Only one person in the family can claim Child Benefit for a child. There is no limit to the number of children that you can claim child benefit for.
How much is Child Benefit?
Child Benefit is usually paid every 4 weeks and in 2024/2025 you are entitled to £25.60 a week for the eldest child and £16.95 a week for any other children in the family.
Why it’s important to claim Child Benefit
If you apply for Child Benefit, it also gives you National Insurance credits. This means that if the person claiming Child Benefit is a non-working parent, they are entitled to National Insurance credits until the child is 12. National Insurance credits count towards your State Pension so are very important. Every year of National Insurance credits that you get while you’re claiming Child Benefit is equivalent to a year’s worth of National Insurance that you would pay for if you were employed. If you apply for Child Benefit, this also means that your child will receive a National Insurance number when they are approaching 16.
So, where there is a non-working parent, it’s important that the person who claims Child Benefit is the person who is that stay-at-home parent. If the other person has claimed, then you can apply or transfer these credits at this gov.uk page.
How do you claim Child Benefit?
You can claim Child Benefit 48 hours after you’ve registered the birth of your child or when a child comes to live with you. You can claim at this gov.uk page or by post or phone. You’ll need the birth or adoption certificate for your child, your bank or building society details and you and your partner’s, if you have one, National Insurance number.
Is Child Benefit taxed?
Although everyone who has a child is entitled to Child Benefit, if you or your partner (who doesn’t need to be the parent of the child) earns more than £60,000, then you will have to pay back some or all the money you receive in Child Benefit through a tax charge. This is called the High Income Child Benefit Tax Charge.
There is a really useful calculator on the gov.uk page which will help you to understand if you, or your partner if you have one, will have to pay this tax charge.
If one partner earns more than £80,000, then the amount you’d have to pay in tax is equal to the amount you’d receive in Child Benefit. Unsurprisingly, many thousands of families decided not to claim Child Benefit if they were going to get a tax bill. The Child Benefit High Income Tax Charge isn’t something you pay automatically if you or your partner earn more than £60,000 a year. Instead, you’ll have to fill in a self-assessment form to tell HMRC if you are claiming Child Benefit and have earnings of over £60,000.
Many people starting families have chosen not to register for Child Benefit at all. But it’s really important to register for Child Benefit especially if one person isn’t working, so that they can receive those National Insurance credits towards State Pension when they retire. You can register for Child Benefit and opt out of receiving any money. That means that you won’t have a tax charge but you will be entitled to those National Insurance credits and your child will receive a National Insurance number.
Check if you should opt back in
Before the 6th April 2024, the threshold above which you could be liable for a tax charge was £50,000 and the point the tax charge wiped out any Child Benefit was £60,000.
This means that some families might want to claim Child Benefit again if they earned more than £50,000 but less than £60,000 and had opted out of receiving Child Benefit. You can backdate your claim for Child Benefit for 3 months.
How high earners can avoid the tax charge
Even if you do earn more than £60,000 after April 6th, or even £80,000, you may not have to pay the Child Benefit tax charge.
That’s because the earnings thresholds at which you become liable for the Child Benefit tax charge are based on something called ‘adjusted net income’, which is slightly different to your annual income.
Your adjusted net income is your taxable income; minus any pension contributions you make before tax is taken off, or contributions where your pension provider has given you basic rate tax relief, as well as charity donations you’ve made through Gift Aid. For example, if your earnings are £64,000 and you pay £4,000 into your pension then you won’t have to pay the tax charge. So don’t just look at your total earnings when thinking about this. Use the calculator above to work out if you’ll have a tax charge.
But be aware that some things are added on top of your salary, like bonuses and company cars.
Making extra pension contributions could be beneficial if you can reduce your income to a level where you don’t have to pay the Child Benefit tax charge, while boosting your retirement savings.
