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The Government has recognised that this is an issue for many families and announced it is reviewing how it backdates a person’s entitlement to state pension for years when child benefit was not claimed.

What is child benefit?

Child benefit is available to a parent raising a child under the age 16 or a 20-year-old in approved training or education. The £24 weekly allowance is paid every four weeks for the first child and £15.90 per week for each child after that. As a result of claiming this benefit, a claimant will automatically receive Class 3 National Insurance Contribution (NIC) credit for those claimed years. This means your state pension entitlement will be intact for those years.   

When does the high income child benefit charge apply?

However, if you or your partner earn adjusted net income of more than £50,000 in a tax year, the ‘high income child benefit charge’ will come in. This is a tax charge effectively claws back the child benefit received. A charge of 1% will apply for every £100 of adjusted net income exceeding £50,000. Therefore, if you or your partner earn £60,000 of adjusted net income a year, the whole child benefit amount will be clawed back.  

This tax charge resulted in some people not claiming child benefit to avoid a tax charge arising. By doing this they lost their entitlement to Class 3 NIC for a relevant tax year and therefore creating a qualifying year for NIC purposes. Currently you can backdate a child benefit claim by three months, but this does not address the issue with earlier years.

Need help with assessing your family position?  

At TaxAssist Accountants, we can help prepare your personal tax return and ensure all relevant reliefs are claimed.  

If you need help or assistance with your income tax affairs, call us today on  0800 0523 555 or drop us a line using our online enquiry form

Date published 23 Aug 2023 | Last updated 23 Aug 2023

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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