If your earnings have fallen below £60,000, for example, if you have been furloughed or your self-employed profits have decreased due to the Covid-19 pandemic, you may be eligible to claim or restart child benefit payments. If this has happened to you, you should act fast as new claims for child benefit can only be backdated by up to three months. Claims to reinstate payments of child benefit can be made for the previous 2 tax years.

 

Eligibility

 

If you are responsible for a child aged 16 or under (or under 20 if they remain in approved education or training) you are eligible to claim child benefit. Only one person can claim child benefit for the same child. However, if you claim child benefit and one of you is a ‘higher earner’, i.e. you have an adjusted net income of over £50,000 you will have to pay the high-income child benefit charge (HICBC). This charge is payable by the higher earner, regardless of which parent/guardian actually receives the child benefit.

 

‘Adjusted net income’ is your total taxable income before your tax-free personal allowance, fewer pension contributions, Gift Aid donations, etc.

 

How is the high-income child benefit charge (HICBC) calculated?

 

For every £100 of adjusted net income exceeding £50,000, the HICBC is calculated as 1% of the child benefit received. This means if you have adjusted net income of £60,000 or more,  100% of your child benefit is repayable via the HICBC. Therefore, many families with a higher earning parent will choose not to claim child benefit as they will be required to submit a Self-Assessment Tax Return and repay the child benefit to HMRC.

 

How much can I claim?

 

·      First child: £21.05 a week

·      Each subsequent child: £13.95 a week

 

Therefore, if you have two qualifying children this could provide you with an additional £1,820 of income each tax year (please note the rates quoted are for the 2020-21 tax year)

 

How to make a claim?

 

If you are the higher-earning parent/guardian and your income has dropped or is likely to drop, below £60,000 you should assess whether it is worth making a claim, even if you have to pay some of it back via the HICBC. If your income has dropped below £50,000  you should certainly consider applying for or restarting your child benefit.

 

You can make a new claim at https://www.gov.uk/child-benefit/how-to-claim.  Restarting previous claims should be made via https://www.gov.uk/child-benefit-tax-charge/restart-child-benefit, and queries regarding backdating previous claims to the previous 2 tax years should be made by telephone to the Child Benefit Office on 0300 200 3100.

 

How can we help

 

Hawsons has a dedicated team of highly qualified and experienced tax specialists who provide corporate and personal tax advice from our offices in Sheffield, Doncaster, and Northampton.

 

Book your free initial meeting

 

More from our tax experts

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