Article provided by Lynne Rowland, Partner at Moore Kingston Smith, for Beacon Gainer, private wealth advisory services group.
Child benefit (CB) is a weekly allowance paid to eligible claimants to assist with the financial responsibilities of bringing up a child. All eligible parents or carers are encouraged to make a claim, even if payment would be subject to high income child benefit charge (HIBC) restrictions. Physical receipt of payment can be waived but entitlement to state pension protected.
What is the amount of CB paid?
The payment for the eldest or only child is currently £21.05 per week, with the allowance for any additional children £13.95 per week.
Who can claim?
Anyone living in the UK with the responsibility for bringing up a child who is under 16 (or under 20 if they stay in approved education or training) may qualify. Generally, only one person can claim CB for a child but there is no upper limit on the number of eligible children within a family unit.
A person is deemed responsible for a child if they live with the child or is paying at least the same amount as CB (or equivalent) towards looking after them. The rules will differ if the child goes into hospital, or care, or lives with someone else.
A person will also be eligible for CB if they foster a child as long as the local council is not contributing toward their accommodation or maintenance. If a person is adopting a child, they may be eligible as soon as the child comes to live with them, even if the adoption process is not complete.
Similarly, if a person is looking after someone else’s child and the local council is not contributing towards costs, they may be eligible for CB as long as no one else is claiming for the same child. A guardian’s allowance may also be available in some circumstances.
Leaving or coming to the UK
If a person leaves the UK, they may still qualify depending on which country they live in or if they are a Crown servant. If they have permission to live in the UK and the UK is their main home, they may qualify for CB if they have pre-settled status or settled status.
How to claim
A claim can be made as soon as the birth of a child is registered or they come to live with the person. The initial claim is made using Form CH2, which must be sent to the Child Benefit Office with any additional documentation requested to support eligibility.
Changes in circumstances
Any changes in a family’s circumstances should be notified to the Child Benefit Office. They can stop payments, or start them, where income levels have dropped, or add additional children to any claim as soon as the birth is registered. They must also be informed where a child’s circumstances change, such as leaving education or starting work.
It is possible to make a claim at any time but note that payments can only be back-dated for a maximum of three months.
Higher earners and the reasons why all eligible parents should claim: From 7 January 2013, the HIBC was introduced. It effectively claws back the entire benefit received if either partner in a family unit earns more than £60,000. Where the higher earner has income of between £50,000 and £60,000, tax is applied at a rate of 1% of the CB paid for every £100 of income over £50,000 but the tax charge is less than the CB paid. It is still usually worth receiving payment and declaring the CB received on the annual self-assessment return.
For higher-earning parents, making a claim has additional benefits, whether or not physical payment of CB is received. Were there are any children under 12 in the household and one parent does not work or only works part-time, national insurance credits are given to protect their state pension entitlements. In addition, making a claim effectively registers that child to ensure that a national insurance number is issued automatically just before their 16th birthday. Without that national insurance number, they will be unable to work in the UK or apply for student loans or benefits.
Form CH2 enables parents to opt out of receiving payment where a claim is made by simply ticking a box. It is recommended that all parents claim to protect state pension entitlements and enable their child to receive a national insurance number without having to make a separate application.