Child Benefit – Urgent Action Needed
In 2013 H M Revenue & Customs introduced a Child Benefit Charge, whereby if you or your partner earn over £50,000, any child benefit received is reclaimed (on a sliding scale between £50,000 and £60,000 income).
The introduction of this charge resulted in a large number of parents ceasing to claim the benefit, simply to avoid having to repay it at a later date.
However, for some this causes a major problem. If as a parent you claim child benefit for a child under 12 years of age, you automatically obtain a National Insurance Credit for that year towards your State Pension, even if the child benefit is then later claimed back.
Under the current rules you need 35 qualifying years to be able to claim a full state pension. If you do not meet these criteria, your state pension will be restricted.
Where one parent is not earning at least £5,824 a year, and has children under 12, it is important that a child benefit claim is still made. Even though this may be reclaimed by way of the Child Benefit Charge on the spouse if they earn over £50,000 per annum, the qualifying year then counts towards a full State Pension which can have a significant financial impact later in life.
In order to avoid this ‘two step’ process, it is possible for child benefit to be claimed at zero rate. In order to do this, you need to tick the relevant box on the child benefit claim form.
If you would like further information regarding this please email tax@streetsweb.co.uk
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