Are you missing out on Child Benefit?
Are you part of the 38,000 mothers in the U.K. missing out on Child Benefit? Most of us would not know but missing out on Child Benefit means missing out on state pension rights... So, why is it important and how does this work?
The bigger picture
According to the Telegraph, analysis of HMRC figures produced by Royal London, the pension company, estimated around 38,000 women have lost a total of £278m in this way since 2014/15. And this figure is expected to go up by 20,000 per annum over the next 3 years.
What is Child Benefit?
“If your child is under 12 and you're not working or don't earn enough to pay National Insurance contributions, Child Benefit can help you qualify for National Insurance credits. These credits count towards your State Pension. They protect it by making sure you don't have gaps in your National Insurance record.” (HMRC)
How can you claim?
You can claim Child Benefit as soon as your child is born (or comes to live with you). The maximum HMRC can award a claim is 3 months from when the claim is received… so make it as soon as possible, it may also take a few weeks to process. You will need to complete a CH2 form (find it here from HMRC website) and include a birth or adoption certificate.
Is this automatic?
No! Be aware that Government is not automatically registering people for National Insurance when they have a baby, so many have been losing out on this benefit.
What is the Child Benefit tax charge?
If your income (or your partner’s) is £50,000 or more, you may have to pay the High Income Tax charge.
You can use this calculator from HMRC to see where you stand on this: https://www.gov.uk/child-benefit-tax-calculator.
The following is very important to note: if you’re affected by the tax charge, you can choose not to get Child Benefit payments, but you should still fill in the Child Benefit claim form. Because this will help you get National Insurance credits which count towards your State Pension.
Why you should consider claiming Child benefit?
And this independently from you current or your partner salary… Since January 2013, according to the telegraph, families affected by the high Income Tax Charge have stopped claiming the benefit because they don’t see any money coming in. Yes BUT “what most do not realise is that by not claiming the benefit they are missing out on millions in potential pension payments.”
Keep in mind that claiming Child Benefit counts as National Insurance credit in any case. So if you are not working and you do not claim Child Benefit, you would be losing rights under the State pension, and this amounts to £231 per annum.
Credit Photo: Tim Bish - Unsplash