You are here: Home - Saving & Banking - News -

Parents suffering loss of income urged to claim £100s in child benefit

Written by:
Thousands of parents who had previously opted out of claiming child benefit to avoid a tax charge may be able to receive £100s from the government after losing income due to coronavirus.

Parents who have been previously put off claiming child benefit for fear of a tax charge or those who were ineligible are urged to check if they can receive up to £1,820 a year in the benefit (for a two child household).

Child benefit has risen to £21.05 a week in the new 2020/21 tax year for the eldest or only child and is £13.95 for additional children.

Where either parent earns £50,000 or more, the High Income Child Benefit Charge (HICBC) kicks in which means the sum will be subject to tax.

For every £100 earned above £50,000, 1% of the child benefit received is effectively withdrawn through the charge. Anyone earning £60,000 or more loses all the benefit through tax, so many simply opt out.

However, this means they lose out on vital National Insurance Contributions potentially missing out on receiving the full state pension in later life.

Given the effect of coronavirus, families are urged to take a second look at their eligibility for claiming child benefit, particularly where they are suffering a loss of income or expect their income to be impacted.

Mutual insurer Royal London said anyone earning £60,000 or slightly more who stopped claiming but then loses 20% or more of their income under the government’s job retention scheme, would find their income falls to £50,000 or below, meaning they’re eligible to claim without being liable for the HICBC.

Parents earning between £50,000 and £60,000 after a drop in income could also claim child benefit, but would still have to pay a proportion back through the charge in their next tax return.

Those who anticipate a drop in income this tax year to below the threshold might also want to start claiming again now, in advance of their income falling, if they need help with living costs.

The most recent official statistics reveal 44,000 parents stopped claiming child benefit altogether in the last year, a downward trend attributed to more parents being dragged above the threshold.

Since the HICBC was introduced in 2013, it is estimated that one million families have lost their full entitlement to child benefit and 1.4 million in total have been affected by the charge.

Becky O’Connor, personal finance specialist at Royal London, said: “Thousands of parents who had written off child benefit because of the High Income Child Benefit Charge may find they can claim it again without having to pay the charge, as a result of falls in income.

“Child benefit is a valuable source of extra help in these difficult times and we are urging parents who had abandoned it but have recently suffered a drop in income to sign up again to receive it.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape, and moving your cash savings to a higher paying deal is a good plac...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week