Can you now claim child benefit? Many more people now eligible from 6 April

Can you now claim child benefit? Many more people now eligible from 6 April

As announced in the Spring Budget 2024, the lower threshold for claiming child benefit will be increasing from £50,000 to £60,000, and the upper threshold from £60,000 to £80,000, from 6 April 2024.

This change means that it may now be beneficial for an estimated 180,000 people who previously have opted not to claim or receive child benefit, to reconsider their position.

In this article we have summarised the changes and how you can apply for child benefit payments.

What is child benefit?

Child Benefit is paid monthly to anyone responsible for children under the age of 16 (or under 20 if they stay in certain full-time education or unpaid training).

There are two weekly Child Benefit rates, £24 for a first-born or only child and £15.90 (per child) for additional children. As an example, if you claim for one child until they’re 16, you will get more than £17,000 over their childhood.

How does child benefit work?

If you (and your partner) have annual income of £50,000 or less (rising to £60,000 from 6 April 2024), you can claim the full entitlement of Child Benefit if the child you’re applying for lives with you (or you are paying at least the same weekly amount as the benefit towards looking after them).

You can claim Child Benefit as soon as you’ve registered the birth or the child has come to live with you. It can take up to 16 weeks to process your claim.

If two people are responsible for the same child, only one will get the payment. Parents can decide between themselves who receives it – otherwise, HMRC will decide.

What happens if one parent earns more than the threshold?

Currently, if you (or your partner) earn more than £50,000 a year, you will still get the full amount of Child Benefit, but you will have to pay some of it back. This is known as the ‘High Income Child Benefit Tax Charge’ (HICBC).

The charge is tapered, so the more you earn over £50,000, the more you need to pay back.

  • For every £100 you receive above £50,000, you need to pay back 1% of the maximum amount of Child Benefit you’re entitled to. For example, if you earn £55,000 a year, you will pay back 50% (meaning you’ll still get over £600 a year if you have one child).
  • If you earn £60,000 a year, the charge you’ll pay back is 100% of your entitlement, meaning you won’t get any benefit.

A point worth emphasising is that the benefit can be claimed somewhat automatically and it sometimes goes unnoticed by families where one spouse earns over the threshold but the other receives the benefits – leading to investigation by HMRC for the HICBC. We therefore advise that you check if you have been receiving it unknowingly, as you could be subject to the HICBC retrospectively.

If you’re not sure whether you are liable to pay the tax charge or how much you will need to pay back you can use the Government’s Child Benefit Tax Calculator.

What is changing from 6 April 2024?

From April, you won’t incur the HICBC until you (or your partner) earn more than £60,000 a year. You will also be able to earn up to £80,000 before you have to pay back the full amount of Child Benefit.

For example, a person earning £65,000 per year will have the full amount of child benefit clawed back for 2023/24. Alternatively, they may have chosen not to receive child benefit at all, to avoid HICBC. However, for 2024/25 (the tax year starting 6 April 2024), the HICBC would only clawback 25% of this individual’s child benefit. Therefore, making it beneficial for them to claim child benefit in 2024/25 where 75% of it would be retained.

Wait to backdate

Child Benefit claims can be backdated for up to three months from the date the claim is made, or to the date of birth of the child if later.

For HICBC purposes, backdated claims will fall into 2023/24 if the claim is made before 6 April 2024 and into 2024/25 if the claim is made on or after 6 April 2024 and before 5 April 2025.

So, by making your claim to backdate your child benefit payments on or after 6 April 2024 you will be assessed against the new (increased) thresholds for the backdated part of your claim.

How do I register to claim child benefit?

A person can claim child benefit, or opt to receive payments having made a claim earlier, by using HMRC’s app or online claim form.

Reducing your High Income Child Benefit Tax Charge

If your income is above the HICBC threshold, you might still be able to reduce the impact of the charge. If you pay any tax-deductible expenses (such as pension contributions), these might take you below the threshold, or at least reduce how much you may have to pay back.

You may also consider arranging income more efficiently between you and your spouse where possible. Where one partner can reduce their income below the threshold by giving more to the other partner who has lower income. This is typically applicable for those with rental properties or dividend income, where the distribution can be tailored.

Benefits to claiming child benefit

As well as receiving payments towards raising your child/children, you will also get:

  • National insurance (NI) credits, which count towards your state pension. Most people need at least 35 years’ worth of NI credits to receive the full state pension, so this is especially important if you are not building up your record (for example earning less than £123 per week).
  • It will ensure your child is registered to receive a NI number shortly before they turn 16.

How do I pay the High Income Child Benefit Charge?

If you or your partner, or both of you, receive an annual income above £50,000, the one earning the most must fill in a self-assessment tax return. We can handle this for you and you can find out more about our self assessment service here.

1280 853 Rouse Partners

Rouse Partners

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This information has been produced by Rouse Partners LLP for general interest. No responsibility for loss occasioned to any person acting or refraining from action as a result of this information is accepted by Rouse Partners LLP. In all cases appropriate advice should be sought before making a decision.

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