Everything you need to know about child benefit and recent changes

Budgeting couple

In recent years, the Government has made significant changes to child benefit, and while it remains a universal benefit, it is means tested. The changes have had real implications for millions of families, so you need to understand what they mean for you.

What is child benefit?

Child benefit is a tax-free payment that’s made to parents to help with the cost of raising children. It’s paid by HM Revenue and Customs to around eight million families in the UK.

If you’re responsible for a child aged 16 or under, or somebody aged 20 or under who’s in full-time education (including A levels, NVQ/SVQs at Level 3, Highers and equivalent) or training (such as foundation learning), then you’re entitled to claim child benefit.

How much is child benefit?

You receive £20.70 per week for an eldest or only child and £13.70 per week for an additional child. You'll receive Guardians' Allowance if you're responsible for another child due to the death of one or both of the child's parents.

Child benefit is usually paid into your bank or building society account every four weeks, on a Monday or Tuesday.

Child benefit changes – high income earners

In 2013, the government introduced the High Income Child Benefit Charge (HICBC). It is a tax charge on child benefit payments and applies to anyone with an income over £50,000 who claims child benefit or whose partner claims it.

The charge increases gradually for those with an income between £50,000 and £60,000. If you or your partner has an income of more than £50,000, you can still receive child benefit payments (but will have to pay the tax charge through the HICBC via a Self-Assessment tax return). The partner with the higher income is always liable to pay the charge.
If your income is more than £60,000, the tax charge will be equal to the amount of child benefit and you might wish to opt not to receive child benefit payments.

Either way, it is important that you still claim child benefit for your child to help you protect your State Pension. It will also help your child automatically receive their National Insurance Number when they turn 16.

If you decide to receive child benefit, HM Revenue and Customs (HMRC) needs to know both the amount of child benefit received and your income after adjusting it for payments such as gift aid and pension payments. The child benefit tax calculator on Gov.uk will help you to calculate your income for HICBC. This will tell you whether you need to complete a Self-Assessment tax return to pay the right amount of tax.

Families can use the calculator at Gov.uk to work out how much tax they may have to pay: https://www.gov.uk/child-benefit-tax-calculator

Why couples need to talk about child benefit

Do you know what your partner earns and vice-versa? If you’re claiming child benefit, does your partner know? Changes to the child benefit rules mean couples need to be honest with each other about how much they earn and what they claim.

Let’s say your partner is earning £50,000 or more and you are claiming child benefit. Instead of the Government simply cutting off your child benefit, they will tax your partner’s income to recoup what you were paid in child benefit.