Claiming for Child Benefit can help give you and your family a financial boost. Yet, since the new Child Benefit rules were introduced in 2013, new parents have missed out on £278 million in state pension entitlements.
What is Child Benefit?
Child Benefits is a monthly payment for those parents looking after children under the age of 16. If you’re eligible, you get £20.70 a week for your eldest or only child and £13.70 each week for each additional child.
Who can claim?
- If both parents individually earn less than £50,000 a year, you will get the full amount of Child Benefits.
- If you or your partner earn over £50,000 a year, you are still entitled to Child Benefit but will have to pay a tax on the benefit at a rate of 1% for every £100 earned over that amount.
- If one parent earns over £60,000 a year, the tax charge means the Child Benefit payment is cancelled out.
How has Child Benefits changed since January 2013?
Before January 2013, Childs Benefit was a universal benefit paid automatically to all families. Since then it has been means-tested, so it is important to check whether you are eligible to claim for Child Benefits.
Why is claiming for Child Benefits so important?
In order to qualify for the full State Pension, you will need 35 years’ worth of National Insurance (NI) contributions or credits, otherwise you will receive a reduced pension. If you are not employed and claim for child benefits you will receive NI credits, therefore protecting your state pension.
This is particularly relevant for mothers or fathers who don’t work (or work but earn less than £188 per week) in order to look after their children.
So, even if one parent earns over £60,000 a year (meaning the tax charge on the Child Benefit payment is cancelled out), it is important that if the other parent does not work they still claim child benefit to build up state pension entitlement.
How much could you lose?
If you miss a year of National Insurance Contributions (NIC) and don’t make it up, you’ll lose 1/35th of the full rate State Pension. This is equivalent to around £250 per year on the pension at retirement.
If you want to find out more, please don’t hesitate to get in touch on 01651 863667.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen