Child Benefit was first introduced in the UK in 1977 allowing families with one or more child to qualify for the non means tested benefit. This replaced the Family Allowance scheme which benefitted only those families who had two or more children. There are strong benefits, however, in high earners still making a claim/registering for child benefit, even if they decide they don't want to accept the payment.
Who can claim child benefit?
Child Benefit is payable to anyone who is responsible for the maintenance of a child who is under sixteen or under twenty years old and in approved education or training.
You can make a claim as soon as you have registered the birth of your child, or they come to live with you. First time parents should complete Child Benefit Claim form CH2, this form can also be used to make a claim for a second child. Claiming for more than two children, Form CH2 (CS) should be completed.
Only one person can claim Child Benefit for a child/children. Therefore, you need to decide who would receive the most benefit from claiming as the person who claims will get National Insurance credits towards their state pension if they are not working or earn less than £190 per week (see more later).
How much child benefit can I expect to receive?
- Child Benefit is paid every 4 weeks.
- There is no limit to how many children you can claim for.
- For the current tax year (2022/2023) the weekly rate for the eldest/only child is £21.80.
- And £14.45 per week for each additional child.
Apart from the weekly payment, what are the other benefits?
- If you register for child benefit when your child is born, this will ensure that your child is automatically allocated their national insurance number (although this will not be issued to them until shortly before their 16th birthday).
- You are allocated National Insurance credits which count towards your State Pension. These credits were introduced from 6 April 2011 for those caring for children under twelve years old and are called Specified Adult Childcare credits. You must apply to HM Revenue & Customs using form CA9176 to receive these credits. This replaces the Home Responsibilities Protection (HRP) scheme.
- In the situation where you are working and paying National Insurance contributions and are also in receipt of Child Benefit – you may build up National Insurance credits in excess of what is needed to receive your State Pension. If this is the case, then there is the option for you to transfer the excess credits to your partner if they are not working or on a low income and not paying National Insurance contributions.
- Child Benefit is not means tested and is not taxable for those earning less than £50,000 – If you and your partner each earn less than £50,000 a year, you will receive the full amount of Child Benefit without having to pay any of it back. However, if one partner earns more than £50,000, then there will be implications. See more under High Income Child Benefit Tax Charge, below.
High Income Child Benefit Tax Charge
For individuals earning over £50,000 per annum, claiming Child Benefit will have an impact. Whilst a parent/carer is entitled to claim Child Benefit, the amount received will be reduced by 1% for every £100 for those with adjusted net incomes over £50,000 up to a threshold of £60,000. After this sum, Child Benefit will not be paid and any benefit paid, will be clawed back, this is known as the high income child benefit tax charge.
What is adjusted net income?
To calculate your adjusted net income you should include:
- Earnings from employment
- Taxable Benefits in Kind, for example in respect of company cars and private medical insurance
- Profits from self-employment
- Rental income
- Investment income
- Certain taxable state benefits
You can then make a deduction for example, for:
- Pension contributions
- Gift Aid donations
This will give you the net adjusted income figure to consider whether the charge applies to you.
I have calculated that I will be subject to the high income child benefit tax charge, what should I do?
You can choose to keep your Child Benefit payments. Claiming will ensure that you qualify for:
- National Insurance credits to protect your entitlement to State Pension;
- Your child automatically being issued with a National Insurance number before their 16th birthday;
- If your income is between £50,000 and £60,000, you will still receive payment of child benefit based on the number of children you are claiming for.
However, you will require to register for self assessment if you do not already complete a tax return and declare the amount of child benefit you received on a self-assessment tax return each year. You then pay the high income child benefit tax charge through the self-assessment tax system.
If you decide you wish to stop receiving Child Benefit payments, this will alleviate the need to complete a tax return and pay the tax charge. However, if your net adjusted income is below £60,000 you will lose out on some of the child benefit you are entitled to.
Although the Government's decision to implement the high income child benefit charge may be viewed as unfair and inequitable due to the fact that a single earner in a household with income of £60,000 would repay all their child benefit, a separate household with two earners each earning £50,000 would retain the full benefit, there are more advantages to making a claim than not. Of course, this very much depends on personal circumstances and the benefits and disadvantages should be considered before making a decision.