The forthcoming changes to Child Benefit have the potential to affect your pension, your children and your tax bill; and if it doesn’t affect you, it might touch those you know – so it’s very important stuff!
From January next year Child Benefit becomes means tested, meaning that individuals earning more that £50,000 will face an additional charge, whilst those earning over £60,000 will no longer be eligible for Child Benefit. There are some complexities arising from these changes:
- The data used to issue National Insurance numbers to 16 year-olds is collated through the Child Benefit system, so if you don’t claim Child Benefits, your child won’t automatically get a NI number.
- If you stay at home to look after a child whilst they are at primary school, these years will count as working years and go towards your state pension. You have to work 30 years to get a state pension. The data to work this out is picked up through child benefits, so if you don’t claim you may miss out on this.
- Those earning £50,000 – £60,000 p.a. can claim the full Child Benefit but they will then later face a tax charge. Such individuals should expect to have to fill in a tax return, and pay the tax in January the following year (unless their tax code is amended). In practical terms this seems pretty complicated, forcing many additional people to prepare tax returns (although I suppose this could be good for me!)
As the Revenue advises ‘Even if you choose to stop the payment, it is still really important to fill in a Child Benefit claim form for any new children. This helps to protect entitlement to State Pension and some other benefits. It also makes sure your child gets a National Insurance number.’
Those earning more than £60,000 can claim Child Benefit, but they will at some stage get a tax bill for this amount. As a result it would be really easy to build up a tax liability – so be careful out there!
If you need any further information HM Revenues & Customs website contains comprehensive advice on how you may be affected.
Need More Advice?
Please contact us using the form on the right or call 0161 947 9207