Should you register for Child Benefit if you – or your partner – earn over £50K

Should you register for Child Benefit if you or your partner earn over £50K?

Child Benefit is a monthly payment to anyone responsible for children under the age of 16 or under 20 if they stay in approved full-time education or unpaid training.

You might feel it is not worth bothering to register for Child Benefit if you or your partner earn over £50K when you come up against the High-Income Child Benefit [HICB] charge and start having to pay back a proportion of the amount. The charge is set at 1% of the child benefit received for each £100 by which income exceeds £50,000.  Even if you or your partner earn £60K when you have to pay back 100% of Child Benefit it may still be worth registering, despite the fact that you have to fill in a Self Assessment form even if you are employed and pay tax through your work payroll. Here are the main reasons:

1. You will get Class 3 National Insurance credits for children under 12 which will contribute to the State Pension. For each year that a parent is registered for child benefit for a child under 12 this equates to one qualifying year for state pension purposes. to qualify for the full state pension you need 35 qualifying years and at least 10 for the reduced state pension. This is especially important if your partner earns over the threshold and you are not earning at all or are on a low salary because you work reduced hours and do not qualify for auto-enrolment. Otherwise when you return to work or increase your hours you may find yourself having to top up your pension in order to ensure it covers your living expenses in old age. [https://www.which.co.uk/money/pensions-and-retirement/state-pension/can-i-top-up-my-state-pension-an0q09p37nsj]

2. Registering will mean your children will automatically receive a National Insurance number when they turn 16.

3. Registering means your details are on the system. If you or your partner’s earnings lower and fall below the Child Benefit threshold you can easily start claiming Child Benefit with just a phone call. Otherwise, you have to fill in the forms and that can delay your claim. Child Benefit is only backdated by three months.

There has been a lot of criticism of the charge on the grounds that it penalises families where one parent doesn’t work or works reduced hours because it is not based on total household income, but on each parent’s individual earnings. That means a couple who both earn £49K won’t incur the charge whereas a couple where one partner earns £51K and other earns nothing will. Where both partners earn over £50K the charge is levied on the higher earner.

Child Benefit can only be paid to one person per child. This is usually the parent the child or children live with most of the time so in the case of divorce or separation it will go to the main carer.

NB: Child Benefit is calculated based on adjusted net earnings before tax, that is, taxable income, including rental income. Certain earnings can be discounted when considering if you are over the £50K threshold for HICB. These include the gross value of personal (relief at source) pension contributions, gift aid and trading losses.

*If you earn below the threshold and are struggling to pay for childcare, you can find out about benefits and other support you can access through www.turn2us.org.uk. They have an online benefits calculator which can tell you want you are eligible to claim. The following site also gives information on childcare support that the government offers.

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