Child benefit – are you missing out?

Is this you or your partner?

Stay at home parents not claiming Child Benefit are losing state pension entitlement.

For couples where one partner earns between £50,000 and £60,000, a progressively rising tax charge (the High Income Child Benefit Charge (HIBC)) is incurred. At incomes over £60,000, the tax charge wipes out the value of the Child Benefit entirely. Registering for Child Benefit builds up entitlement to the state pensions for parents of children under 12 who do not pay National Insurance contributions (e.g. because they decide to stay at home to look after their children). If the parent doesn’t register for Child Benefit, they may forgo their entitlement to National Insurance Credits, and therefore part of their future state pension.

When the tax charge was introduced in January 2013, HMRC wrote to affected households asking if they wished to opt out of receiving the benefit. Those who opt out continue to get the National Insurance Credit required for the full state pension. However, parents who have started a family since January 2013 may have seen no advantage in registering for Child Benefit due to the tax charge. These families—for instance, consisting of a higher earner and one stay-at-home parent—could be missing out on the National Insurance Credits required for a full state pension.

So – the important action is to register for child benefit and to opt out of receiving it if the higher earner in your household earns over £60,000. If their earnings are between £50,000 and £60,000 it is often worth receiving it and repaying it through self assessment.

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