Major change to child benefit for thousands of parents – and it can save them cash
A MAJOR change to child benefit for thousands of parents could help families save some cash.
Most parents in the UK can claim the benefit which can top-up their incomes by £1,000’s every year.
Child benefit is currently worth £24 a week for the eldest child or only child, adding up to £1,248 a year.
For each subsequent child, parents get £15.90 a week – or £826.80 a year.
But if you earn over £50,000 you’ll be liable for the High Income Child Benefit Charge.
This means you pay back 1% of your child benefit payments for every £100 of income over this amount.
Right now, parents have to claim the child benefit and then register for self-assessment in order to pay this charge.
Once you reach £60,000 of income you have to repay the full amount.
The charge applies when just one parent or guardian earns more than the threshold, and not on combined household earnings.
It’s up to parents to notify HMRC if they are liable for the charge and they must file a self-assessment tax return to pay it.
But the complexity means that thousands of parents who were not aware of the charge have been left with a penalty on top of an order to repay the child benefit charge.
HMRC issued over 150,000 fines for non-compliance in the 2019/20 financial year alone.
It comes after The Sun spoke to one parent who had to borrow £20k against his home to pay off the charge.
However, the Treasury has confirmed today that it will simplify the process for customers who become liable to the High Income Child Benefit Charge.
The government will provide details in due course on how it will enable employed customers to pay through their tax code.
The change will mean that claimants will no longer be required to fill in a tax return at a later date.
Any change to the way in which the charge is collected will be communicated to the public at a later date.
Steve Webb, partner at consultants LCP said: “One of the many flaws of the High Income Child Benefit Charge is the way it has caught thousands of families unawares.
“Parents with simple tax affairs who would not normally have to fill in a tax return have needed to do so once their annual income exceeded £50,000, perhaps because of a pay rise or bonus.
“Those who have failed to do so, often simply through lack of awareness of the system, have had to pay the charges and have also faced fines.
“The news of plans to make collecting this charge more automatic is welcome – just ten years too late.”
Who is eligible to claim child benefit?
You will normally qualify for child benefit if you live in the UK and you’re responsible for a child under 16.
The support can also be claimed for a child under 20 if they stay in approved education or training.
But when two or more people share caring responsibilities for a child, it can only be claimed by one person.
To be considered responsible for a child, you will live with them or pay at least the same amount as child benefit rates to look after them – for example, for food, clothes or pocket money.
Foster parents can also claim Child Benefit as long as the local council is not paying anything towards their accommodation or maintenance.
Legal guardians or parents who are adopting a child can also apply for the support as soon as the child comes to live with them.
How do I apply for child benefit?
As soon as you have registered the birth of your child, or once they’ve come to live with you, you can open a claim.
It can take four months to process a new child benefit claim, sometimes longer if you’re new to the UK, but it can be backdated for a maximum of three months.
So it’s best to start the application process as soon as possible.
To apply, you’ll need to fill in a Child Benefit claim form CH2 and send it to the Child Benefit Office.
The address to send it to is as follows:
Child Benefit Office (GB)
Washington
NEWCASTLE UPON TYNE
NE88 1ZD
Note that you’ll need a stamp in order to send off the application form, and these can be purchased from the Post Office.