Child benefit - should I stop claiming & do I lose pension contribution years?

[purplecrayon]

Hoping someone can help with this - under the new rules for child benefit, dh earns over 60k so we will lose all of it.

However, I am a sahm, have a 4yo. I think I am receiving "credit" towards my number of years of NI contributions by virtue of the fact that I am claiming child benefit (home responsibilities protection?). I don't understand whether I should continue claiming child benefit and have dh pay it back though a tax return or whether I can just stop claiming but still receive the home responsibilities protection credits towards the number of qualifying years I have for my state pension?

Help appreciated!

bump

Keep claiming. Then you will at the very least get the interest on that money as you will not have to pay any of it until your DH has submitted his tax return and they have (presumably) altered his tax code.

Does he earn way over £60k or close? How much does he put in a pension? The figure net of pension contributions, grossed up if a private pension, is what matters.

I am uncomfortable with the idea of a big bill coming (his tax return). At the moment, on his tax return, he ends up owing the taxman very little indeed as basically all tax goes via paye done by the employer and our bank interest is very small and we have nothing else. If we had to pay all the child benefit back, it would take his tax bill from a few quid to about £1400 which I don't really want unless it is necessary for me to maintain my home responsibility years on my own NI ontributions.

You don't stop the claim as such, just the payment, so can still accrue the NI credits as before.

Oh right, that sounds like what I need to do, thanks.

Don't worry about a big tax bill. They won't make a demand for it back as a payment, they'll adjust his tax code for the following year so he pays a little bit more tax each month over the following year. So you get the money but by bit each month and then he pays it back but by bit each month the following year.

It is the only way to protect your state pension while you're a SAHM. All SAHMs should continue to claim, and all new parents should claim too, whether SAHPs or not, as the child's NI number is generated by the claim (crazy system, but there you go). If you don't claim for a new child, the normal process of the NI becoming active at 16 won't happen, so your child will have to apply separately at age 16. That may or not be a hassle, I don't know.

I would n't bet on being able to pay it back via a tax code adjustment , especially bearing in mind it could be more than a year after the payments have been made (you wouldn't be due to send an online return for Jan-April 2013 until Jan 2014, April 2013-April 2014 in Jan 2015 etc). In fact when you do a tax return you are supposed to send the cheque with the paperwork. dh is always expected to pay up within weeks, even several thousand pounds, in total when they recalculate too. You would still register a birth as if to claim, which gets them into NI system and you the credits, but just don't receive the payments.

I personally don't see the point in continuing to claim, knowing that you will be repaying 100% of the money -whether in a lump sum or via paye tax increase. As i understand it, stopping the payments will not affect qualification for a state pension.

moody - stopping claiming does affect qualification- that is how you qualify if you are a SAH - parent -
it is worth looking a ways to bring his relevent salery down -and if he is paying into a pension already that part won't count - other ways are childcare vouchers, pension, some unpaid leave that kind of thin

I'd keep claiming. I could be wrong but the recovery of the tax due is only going to come into play at the end of the 2013/14 tax year when self-assessments are submitted. This means the tax-codes get adusted for 2014/15. If it's £1400/year that effectively means just over £100 extra tax per month which could be offset with things like higher pension contributions, charitable donations and so on.

No housesalehelp you are wrong. If you disclaim CB because you don't want to have it clawed back you still get the credit for state basic pension. And the claim form for a new child has been amended to make the position clear.

HOWEVER if you continue to claim...

1. you will never have to pay more in clawback than you would lose by not claiming
2. you get to keep the money in the bank for up to 21 months
3. you don't have to do anything if there is any change such as redundancy, separation or death

... so can you not just put the CB straight into a deposit account and leave it alone?

housesalehelp - I am pretty sure it doesn't affect qualification as long as you are in the system. So for those who receive CB currently but opt to stop the payments because of the recent changes will not have their pension contributions affected. I have checked this with HMRC so hopefully it is the case!