Claim Child Benefit for a Full State Pension
15th August 2018
If you or your partner are earning more than £60,000 a year it can seem that claiming Child Benefit is an effort in futility. Things could not be further from the truth, and this misconception could result in stay-at-home parents failing to build up their full state pension entitlement.
Child Benefit is a regular payment from the government to assist in the raising of a child under the age of 16 (or 20 if in full time education or training). This is tax-free money if each partner is earning less than £50,000, but becomes slightly more complicated if you fall over this threshold. You can still claim the benefit, but to do so the ‘high-income earner’ will have to complete a self-assessment tax return, and a ‘high income child benefit tax charge’ will be applied to their income. This charge increases gradually as you earn from £50,000 up to £60,000, equalling the amount received in Child Benefit at the top of this range.
So, particularly for people who have a partner earning greater than £60,000, it is easily understood why one might not want to bother claiming Child Benefit – there is no apparent gain to doing so, and having to fill out a self-assessment tax return could be considered an inconvenience.
However, an often-unspoken part of the Child Benefit allowance is that the claimant receives National Insurance Contributions for as long as the child is younger than 12 years old. To not apply means missing out on these NICs, which could result in the stay-at-home parent failing to build up their full state pension entitlement.
Our advice – apply for Child Benefit regardless of your partners income. Best to stay in the NICs system and ensure you receive a full state pension
For help with any of your accounting or business advisory needs, please contact Stack & Jones Accountants on 01869 277973 for a free 1-hour consultation.
Sources: The Guardian, gov.uk, moneyadviceservice.org