Higher earner and Child benefits?

[Iambouddicca]

Hi I am hoping someone might be able to advise me. DH has recently got a new and higher paying job. He is now over the child benefit threshold. However I am a SAHM (and thanks to Covid I am likely to be staying one for the time being) and I believe that claiming child benefit gives me some benefits as regards National Insurance?

I understand there is a way to still receive CB to protect NI and then for DH to pay it back through his tax? Is this the case and if so how do you go about sorting it out? I'd be very grateful if anyone could point me in the right direction, thanks.

You can either claim the CB and then pay it back via the higher earner or claim it but opt out of getting the money and then nothing needs paid back. To pay it back the higher earner needs to do a self assessment tax return and declare it on there. Claiming but opting out of payment still protects your NI credits

Not sure about the NI thing , in that I have heard that's the case but am not in that position
We claim it and normally pay it back through tax return
We do this because our income can vary

The simplest way is to claim it and tick the box saying you don’t want the money to be paid to you.

That way you get the NI credits and don’t have to do a tax return.

Child Benefit and your State Pension

If your child is under 12 and you’re not working or do not earn enough to pay National Insurance contributions, Child Benefit can give youNational Insurance credits.

These credits count towards your State Pension, so you do not have gaps in your National Insurance record.

If you’re affected by the tax charge

You can choose not to get Child Benefit payments, but you should still fill in the Child Benefit claim form. This will help you getNational Insurance creditswhich count towards yourState Pension.

Claiming Child Benefit also means your child will get theirNational Insurance numberautomatically shortly before they’re 16. They will not have to apply for one themselves.

www.gov.uk/child-benefit-tax-charge/pay-the-charge - tells you how to register for self assessment

Your husband could pay more into his pension to take you under the threshold and you could still get child benefit that way.

We stopped claiming CB as soon as the threshold was introduced, which I think was in 2013. Our son was 10 then, I continued to receive my national insurance credits until my son turned 12, (12 is the cut off).
So you still receive your national insurance credits, even if you don't claim CB.

The best way is to claim the benefit, then your husband should do a self assessment tax return where he'll pay it back.

Your NI contribution credits are applied, you get essentially an interest free loan, and if his circumstances change in future you still get the benefit.
Don't blow the money though, perhaps put it in a savings account or premium bonds.

I would claim it and pay back through income tax.

I stopped claiming when we moved abroad then didn’t bother claiming again when we returned because DH’s income was high. Then the DC didn’t get an NI number when they turned 16. It took about 8 months of phone calls to loads of different offices and finally someone found a way to find their NI numbers.

It is generated when you make a claim for CB and sits dormant in your file until the child’s 16th birthday.

My record was deleted after 5 years of not claiming, so technically my DC didn’t exist until that person realised what had happened.

Dh could pay more into his pension?

Depending on how far over he is, might be best to take the money and repay some or all by a tax return, which really will is quite easy, it's not the total ballache that many make it out to be. Also, if he's doing a tax return it might also give him the opportunity to claim other allowances eg if he WFH, pays professional subscriptions or washes a uniform at home.

But first he should check what his 'adjusted net income' is because pensions can be deducted but taxable benefits like company cars or private health insurance need to be added on. There's a calculator on the HMRC website.