HMRC – Get pointers on Child Benefit and the High Income Child Benefit Charge

Why should people claim Child Benefit and will a new job affect claims? We’ve got the answers to your questions.

Mother & Child on Computers

 

The start of a new year is a good time to take a look at your personal finances. Claiming Child Benefit can boost your family budget but there’s more to it than just the payments. It can help protect your State Pension and it also helps children to get their National Insurance number automatically at 16.

It’s also important to be aware of the High Income Child Benefit Charge (HICBC), if you get a promotion or a new job. It’s a tax charge which applies to anyone with an income over £50,000, who gets Child Benefit or whose partner gets it.

Am I eligible to receive Child Benefit?

You’ll get Child Benefit if you’re responsible for a child who is under the age of 16, or under the age of 20 if they remain in education or training.

Child Benefit is paid at a weekly rate of £21.05 for the first child and £13.95 for each additional child. You’ll receive it every 4 weeks.

Only one person can claim Child Benefit for a child.

How do I claim child benefit?

If you haven’t filled in a Child Benefit form, make sure you do it as soon as possible because we can only backdate your claim by up to three months.

You’ll also need to get in touch with HMRC if your circumstances change, or if you need to add a child to an existing claim.

How can Child Benefit help protect my State Pension?

If you’ve taken a break from work to look after your child, or don’t earn enough to pay National Insurance contributions, something as simple as making the claim in their name will help protect their State Pension, as you will get National Insurance credits until your child turns 12.

How much is the HICBC?

The tax is 1% of Child Benefit for each £100 of income over £50,000. If your income is over £60,000 the total HICBC will be equal to the Child Benefit you receive.

Even if you do have to pay the charge, you could still be better off by claiming Child Benefit.

To work out how much you may have to pay, use the Child Benefit tax calculator.


Example:
You and your partner have two children and get £1,820 a year in Child Benefit payments. You are employed and your income is £55,000 a year after pension deductions.

Your partner stays at home to care for your two children.

The Child Benefit tax calculator confirms your HICBC is £910 – which equates to 50% of the Child Benefit you receive.

As your partner is not employed and does not receive National Insurance credits, they claim the Child Benefit so they get the credits to protect their State Pension.


How do I find out if I’m affected by the HICBC?

You can find out if you’re affected by the HICBC by checking your personal finances. Check your annual income either on your P60 or in your personal tax account.

Pension contributions and payments to charities are not included in your income for the HICBC calculation but your salary and taxable benefits-in-kind, such as a company car are.

If you have a partner, their income should also be taken into account, as the highest earner will be liable to pay the charge – even if the other partner is the person claiming Child Benefit and receiving the payments.

If you don’t know your partner’s income, HMRC has information available on how we can help you find out if you may have to pay the charge.

How do I pay the HICBC?

To pay the tax charge, you need to fill in a Self Assessment tax return tax return each tax year by and pay what you owe by 31 January. If you do not usually send a tax return, you need to register by 5 October following the tax year you need to pay the tax charge.

We recommend you start your return now to:

  • make sure you receive your activation code through the post after you register, which can take up to 10 working days
  • give yourself enough time to find any extra information you may need
  • find out how much you owe – this can help you budget and plan for your January payment.

Can I opt out of Child Benefit?

If you don’t want to pay the HICBC, you can opt out of claiming Child Benefit payments. This means you won’t have to pay the charge but you’ll still protect your State Pension by getting National Insurance credits until your child turns 12.

For more information, read HMRC’s advice on how to stop getting Child Benefit.

You can stop or restart receiving Child Benefit payments online at any time if your finances change.

What can I do if my finances have been affected by coronavirus?

HMRC know many people who have to pay the HICBC have been adversely affected by the coronavirus pandemic, or will need help to spread the cost of their tax bill. That’s why we’ve made it quick and simple to set up a payment plan to spread the costs. It’s easy to do online and there’s no need to call us to set it up.

Once you have completed your 2019 to 2020 tax return, and know how much tax is owed, you can set up your own payment plan to help spread the cost of your tax liabilities, up to the value of £30,000.

You can use the self-serve Time to Pay facility to set up monthly direct debits and this can all be done online so there is no need to phone HMRC.



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