Child Benefit: need-to-know

Since 6 April 2024, higher income thresholds have applied for the High Income Child Benefit Charge (HICBC), putting Child Benefit payment back on the map for some claimants, and opening the door to a first-time claim for others.

The Charge and your options

The HICBC now applies where an individual claims Child Benefit, and they or their partner have adjusted net income over £60,000. It claws back Child Benefit at a rate of 1% for every £200 of income between £60,000 and £80,000. From £80,000, all financial benefit of payment is lost. Note that as the Child Benefit recipient isn’t necessarily the same as the person liable to the HICBC, there is potentially the situation where one partner has received Child Benefit, but the other partner effectively has to repay it.

To avoid the hassle of the HICBC, but keep entitlement to National Insurance credits contributing towards State Pension, you can ‘claim’ Child Benefit but opt out of payment. This also ensures the child automatically gets a National Insurance number at age 16.

HMRC has now made the opt-in opt-out process easier with a new online system on gov.uk. It can be used to opt back in to receiving payments for the current tax year or previous two tax years. But you must already be claiming Child Benefit to use the online service: and it can’t be used if payments would be completely clawed back by the HICBC.

Home Responsibilities Protection: HMRC seeks ‘lost’ claimants

State Pension entitlement could be understated for some people who became parents between 6 April 1978 and May 2000 and claimed Child Benefit. Women now in their 60s and 70s are most likely to be impacted.

The mix-up arises because, in some cases, an earlier scheme called Home Responsibilities Protection (HRP), designed to protect State Pension entitlement, wasn’t linked to National Insurance records.

HMRC is trying to identify those affected, writing to those it thinks might be eligible for HRP, with a view to recalculating entitlement to State Pension where needed. Anyone with concerns should check their National Insurance record for gaps. At the end of the day, any ‘missing’ HRP has to be applied for. The page ‘Apply for Home Responsibilities Protection’ on gov.uk outlines what to do.