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, first in 2013, then again in 2017. Instead of being a universal benefit that all families received, child benefit is now means-tested. The changes to child benefit are complicated but they’ve 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 from April 2017

On 6 April 2017, the Government’s “two-child limit” came into effect. Parents already getting benefits for more than two children will continue to get those benefits.

However, new parents won’t be paid an additional amount for more than two children, unless the children are born before 6 April 2017 (on or before 6 April for Income Support) or special circumstances apply.

If you have three or more children you won’t be able to make a new Universal Credit claim at the moment – unless you are making a re-claim because you were getting Universal Credit within the last 6 months.

At the same time, the Government also abolished the “family element” of child tax credit (this is the basic amount paid – the additional amount is known as the “child element”). If you have a child born on or before 6 April 2017, you will continue to receive the family element. Families in which all children were born after 6 April 2017, will no longer receive the family element.

Changes to child benefit introduced in 2013 – high income earners

In 2013, the Government introduced legislation which means child benefit is no longer available to all parents. The new rules, which take the form of the High Income Child Benefit Tax Charge, are designed to limit the amount of child benefit received by higher earners. This means that:

If you or your partner is earning £50,000 or more per year, you can no longer claim child benefit for each child. If you do receive child benefit, you will have to pay some of it back through taxation. This will effectively cancel out some or all of the benefit you receive. You can simply choose not to claim it.

If you or your partner earns more than £60,000, you shouldn’t claim child benefit. The amount of tax you would pay would more than cancel out what you have claimed.

It’s worth remembering that the limits only apply to one salary so both you and your partner can earn up to £50,000 a year each and not lose any child benefit at all.

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. So you need to let your partner know that you’re claiming it. Alternatively, you can opt out of claiming child benefit.

Should I opt out of claiming child benefit?

You can opt out of receiving child benefit at any time. But is that what you want to do? If you or your partner’s income is around the £60,000 threshold then you should think carefully, especially if you’re self-employed.

If it’s possible that your income could fall below £60,000 then you should probably keep receiving child benefit. If you’re not entitled to it then the Government will recoup the money through taxation. But if you’ve opted out then, while you can always opt back in, you can’t claim money you should have received retrospectively.