Interactive Investor

Child Benefit: 180,000 families could forfeit up to £3,094

Some may lose the state pension if they don’t take action, warns Alice Guy.

8th March 2024 10:50

Alice Guy from interactive investor

With Child Benefit changes potentially benefiting 485,000 higher earners, interactive investor highlights that 180,000 families need to take action now to make sure they benefit from the changes.

The existing rules mean that thousands of families decide not to claim Child Benefit, knowing they will have repay it later through the High Income Child Benefit Charge. In addition, many higher-earning families who claim Child Benefit have opted out of receiving payments by ticking a box online.

HMRC figures reveal that 180,000 families will be eligible for Child Benefit under the rule changes that are either not currently claiming or have opted out. These are families where the higher earner earns up to £80,000, so could be eligible under the new rules. However, they will need to claim Child Benefit from scratch or untick the box online if they want to receive it.

 Alice Guy, Head of Pensions and Savings, interactive investor says: “Thousands of families have opted out of the Child Benefit system and will now have to scramble to opt in again. They will need to reapply from scratch or log in online to select that they want to receive Child Benefit. Child Benefit is automatically backdated by three months, or to the child's date of birth (whichever is later).

“Even if you earn over £80,000, it’s important to check if you’re eligible for Child Benefit as your income is calculated after deducting pension payments and gifts to charity under a gift aid scheme.

“Child Benefit is worth up to £3,094 from April 2024 if you have three children and £2,212 if you have two children, which is enough to make a big difference for many families struggling with a rising cost of living.”

“While reasons for opting out aren’t explored in the government’s data, some families may have elected to not receive Child Benefit rather than going through the hassle of paying back the Child Benefit via self-assessment.”

“The high level of those not claiming Child Benefit raises concerns that parents are unwittingly missing out on valuable National Insurance credits, which could potentially boost their state pension in future.

“To receive a full state pension you need 35 years of either National Insurance payments or National Insurance credits. Claiming Child Benefit gives you a National Insurance credit if your child is under 12 and therefore could increase your state pension when you retire.”

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