High income child benefit charge

[MyPurpleHeart]

Hi everyone

Looking for someone to dumb down this for me because I don't understand

I haven't claimed child benefit since my 6 week old was born as the combined income between me and DH is too high. I was told you'd have to pay it back so I thought that's just a faff and I won't bother even applying

Although now I've read that this affects pension contributions and DD getting a national insurance number when she's older.

Can someone explain it to me in layman's terms please because I'm lost

Thankyou

As far as I know is not dd it would affect it would be if one parent WASNT earning but the other was and was over the claim limit? It affects them.

If you are not employed, claiming CB gives you an allowance towards your state pension in the form of NI credits. You would normally pay NI if employed, this is a credit to essentially acknowledge your "work" rearing a child.

It also means your DC gets an NI number automatically sent to them when they are 16, without having to actually remember to apply for it!

You can apply for CB but opt out of the actual payments, which gets you the above benefits without having anything to pay back.

Als0 -its not combined income. It's if one of you earns over £50k.

It's actually in one of you has a taxable income of over £50K. So someone earning £90K and putting £40K in their pension would still get CB. Your marginal rate between £50-60K is very high (I have 3DC and it's 67%) so for pretty much everyone it's worth upping your pension contributions.

I have recently looked this up and you can still claim the NI credits without claiming the money, which is what I do. You still need to apply with the forms but MUST tick the box to say you do not want to receive the money. I didn’t claim at all for DC1 because I didn’t know I needed to. Now I have a claim for DC1 & 2 but don’t get the money.

@JaninaDuszejko does that apply if I earn £60k and put £10k in my dh’s pension instead of my own? He is more in need than me :)

Several issues in play here that need untangling.

Child benefit is pretty much a Universal Benefit except that if one parent pays Higher Rate Tax you get less and it tapers off to zero fairly quickly. In that situation you can either not get CB or it's recovered from the Higher Rate Tax payer via a change in their tax code.

As of now, if you're not earning and not paying HR tax then, unless your partner is a Higher Rate Taxpayer you can claim it and be paid.

One effect of getting Child Benefit is that you get National Insurance Credits which go towards your pension. As they're Class 1 credits they might help with other benefits for ill health or unemployment (although credits alone may not count - you need conts from earnings too).

If you're not getting CB because your partner pays Higher Rate Tax you can still get NI credits to protect your pension etc.

I cannot see any link between CB/the high income tax charge and your child getting a NINO at 16.

Hope this helps.

I don’t think this is a universal issue as it depends how your local authority run things but for school applications our LA demanded proof of child benefit entitlement as part of the school application process. We simply hadn’t bothered applying due to our income, which turned into a mighty headache. For our second child we completed the forms but said we didn’t want to receive payment.

No, doing that won't reduce YOUR income down to £50k, so you'll still have to repay CB based on earning £60k.

I think you are wrong user… I think you can up your pension contributions and avoid it. That is what I did - seems to have worked!

https://www.mfpwealthmanagement.co.uk/blog/contributing-to-a-family-members-pension

your
What you pay to someone else s pension does not count

Mumsnet

oh I see I paid mine to me …

This. You still need to apply for CB and tick the box not to actually receive the payments. This protects your state pension rights.

It's a mad system.... how on earth are people meant to know that they are still supposed to apply if they aren't eligible for the payments?!

Paying into your own definitely counts but I can’t find any guidance on paying into a spouse’s.

It is either income not combined that needs to be less than 60k. Worth registering , which will keep your ni record and get the baby allocated a ni number, and opting out of payments if either of you will earn more than 60k this tax year(bearing mind you're presumably on ml). If either are likely to be less than 60k but over 50k completing a tax self assessment will repay any over claim, as there is a sliding scale between 50 and 60k. If both are under 50k each you will be entitled to it in full. CB is backdated up to three months so you are not too late.

This is where I sit, I've recently moved into that 50-60k bracket and don't fully understand what the best option is. Is there a calculator out there somewhere I wonder? vaguely wanders off the thread to google

It's all on the gov.uk webpage re child benefit. Not sure what else the govt could do to tell people really.

Another oddity is that the London ULEZ scrappage scheme is being extended to those that claim child benefit. So if you have an old skip of a car to get rid of, and you live in outer London, you might be better off claiming.

DH earns over £100 so we are exempt. But I am SAHM so I’ve recently applied for it but clicked don’t pay us (would mess with DH pay check as we would receive money and he would pay it back each month).
I’ve done this so these couple of years still contribute to my state pension

I think it’s best if you are close to £50k to put extra in your pension to top you just under £50k and then you get the full benefit. Between 50-60 you get a portion of child benefit

As others have said, it's not combined. If either partner earns over £50k individually some repayment will be taken through their tax. If they earn £60k, at that point there's no point claiming it anymore (unless for some reason your finances are entirely separate, as you'd still get the money but they'd get it al taken off again in their tax bill).

Does that pension deduction also include money paid into a private pension?

But even over 60k it is worth registering but opt out of receiving payments. You can always then opt in if circumstances change.