Child Benefit may be deemed a “waste of time” by many families with salaries of £50,000 or more due to a “high income” tax associated with it but experts are warning that failing to claim this support could impact how much people get from the state pension.
Since 2012, the take-up rate of eligible children for whom Child Benefit is claimed has reduced from a high of 97 per cent in 2012 to its lowest level in 2022 of 89 per cent, according to Government statistics.
Experts have blamed the introduction of the High Income Child Benefit Charge in January 2013, claiming it disincentivises parents or guardians for claiming it.
Royal London’s personal finance specialist Sarah Pennells warned people could put their retirement plans at risk by not claiming this benefit.
Households earning a certain amount are at risk of falling foul of the High Income Child Benefit Charge
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Speaking to GB News, she explained: “Unsurprisingly, many thousands of families have decided that it’s a waste of time to claim Child Benefit and then get a tax bill for the same amount. In particular, people starting families have simply chosen not to register for Child Benefit at all.
“However, not registering for Child Benefit means that you miss out on the National Insurance credits for your state pension if you have a child under the age of 12.
“A parent at home with a young child may be left with a gap in their National Insurance record, but by registering for Child Benefit, that record is protected for the year.
“Registering also means that your child gets a National Insurance number without them having to apply for it.”
To claim the full rate of the new state pension, taxpayers must have 35 years of National Insurance contributions under their belt.
Earlier this week, the Government outlined plans to enabling parents and guardians who have missed out on National Insurance credits in the past by not registering for Child Benefit, to claim them.
Britons can claim Child Benefit if they are the parent or guardian of a child under the age of 16 and live in the UK.
As it stands, £24 a week is awarded to the guardians of an only child or the eldest child, while a weekly rate of £15.90 is given for any additional children.
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Claiming Child Benefit helps people earn credits towards their state pension entitlement
PEXELSThe High Income Child Benefit Charge is levied on people if they or their partner earn more than £50,000 a year.
Parents or guardians who cross this threshold will have to pay back some or all of the money they get through the tax charge.
Anyone who earns over £60,000 will have to pay back the entirety of the Child Benefit they have claimed.
They will have to fill out a Self Assessment form to do so, with the deadline for the 2022/23 tax year being January 31.