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Child Benefit goes digital but system still 'too complex'

Child Benefit goes digital but system still 'too complex'
Emma Lunn
Written By:
Emma Lunn

HMRC has made a big change to the way families claim Child Benefit - but experts say the way the benefit is claimed is still too complicated.

New parents can now claim Child Benefit online for the first time since it was launched 47 years ago. Up until now families claiming Child Benefit have had to fill out a paper form, post it, and wait as long as 16 weeks for their first payment. 

But HMRC said the new digital process will be “quick and easy” with payments made in as little as three days.

Child Benefit is worth £24 a week – or £1,248 a year – for the oldest, or only child. The rate for each additional child is £15.90 a week – or almost £827 a year. Claims can be backdated for up to 12 weeks and families are encouraged to apply as soon as possible so they don’t miss out.

How to apply for Child Benefit online

Parents can claim Child Benefit from the day after a child’s birth has been registered.

The first thing you need to do is create a Government Gateway account if you don’t already have one. To do this, you’ll need a passport and other proof of ID. When creating a new account, HMRC will send you an activation code via email – once you have received this, you can apply for Child Benefit online.

Next, make sure you have the necessary documents to hand. You will need:

  • your child’s birth certificate
  • your bank details
  • your National Insurance number
  • your partner’s National insurance number (if you have a partner)

If your child is adopted, or their birth was registered outside the UK, you will need to send additional information through the post to support your application – the online system will tell you what you need to send.

A complicated benefit

Although many families will welcome the ability to claim online, experts have pointed out that the Child Benefit system is still complicated, and arguably unfair.

There are different rates and rules depending on how many children someone has, and whether both parents are living together as a family or they’ve separated. 

In addition, only some families are eligible, depending on their earnings. Once one partner earns more than £50,000, the benefit is gradually eroded, eventually being revoked entirely for those earning more than £60,000. 

Unfortunately, it doesn’t matter what your household income is, so a family with a single earner paid £60,000 gets nothing, whereas two parents paid £50,000 each can claim the full amount.

Laura Suter, AJ Bell director of personal finance, said: “That £50,000 earnings threshold has been locked in place, despite rising wages – if it had increased in line with inflation it would be at £65,000 today. As a result the number of families getting Child Benefit payments has dropped to its lowest level since records began, with the continual freeze on the so-called ‘high income’ threshold hitting more and more parents.

“A total of 683,000 families opted out of getting the payments, according to the latest figures, accounting for 1.05 million children. If these families had been eligible they could have claimed £1.15bn in additional support.

“On top of that, 43,000 fewer families were claiming child benefit altogether, when compared to the previous year. This is because they have hit the high income charge and no longer want to claim the money.”

Take-up of child benefit is particularly low among families of smaller children, with the pandemic meaning that more people are unaware they can claim or how to claim. 

The usual contact points with families were reduced to a minimum during lockdown, meaning that many new parents are unaware they could be entitled to support. As a result, non-working parents who could benefit from the National Insurance credits could be needlessly leaving a shortfall on their state pension record, leaving them poorer in retirement.

Suter added: “The Government has pledged to try and do something about this, promising to allow people – often mothers – to claim for any missed NI credits not allocated to them when they were looking after children and not working or claiming child benefit. However, no concrete information has yet been forthcoming, and it will doubtless involve more form-filling and complexity for parents to try and get their heads around in any case.”