Under current rules, you’re eligible for the full amount of Child Benefit if you earn under £50,000 a year, once you start to earn over this you have to start paying it back through the HICBC.
The rules for Child Benefit are changing this weekend and will see fewer Brits having to pay cash back to HMRC.
The main change to the benefit was announced in the Spring Budget and revolved around the High Income Child Benefit Charge (HICBC). Child Benefit is a monthly payment made to someone responsible for a child under the age of 16, or under the age of 20 if they’re in approved education or training.
Under current rules, you’re eligible for the full amount of Child Benefit if you earn under £50,000 a year. Once you start to earn over this you have to start paying it back through the HICBC. You have to pay back 1% of your Child Benefit payment for every £100 of income you earn above £50,000 a year and if you earn over £60,000, you’ll need to pay back all of it. You have to pay this back through self-assessment.
However, from April 6 the threshold for when you have to start paying the benefit back rises to £60,000. The higher limit is also being increased to £80,000 a year which means you’ll be able to earn up to £80,000 a year before your Child Benefit is completely stopped.
Alongside this, the amount of Child Benefit you are paid will also rise from April 6. Currently, you get £24 a week in Child Benefit for your first child, then any other child you have qualifies for £15.90 a week each. From Saturday (April 6) these rates will rise to £25.60 and £16.95 a week. This means the payment will be worth £3,094 a year for someone who has three children or £2,212 if they have two children.
Parents who were previously affected by the HICBC rules have recently been issued a warning ahead of the change. The existing rules have meant that thousands of families decided not to claim Child Benefit altogether, knowing they would have to repay it later through the HICBC.
However, if they are now eligible for the benefit under the new rules they will need to put in a new claim from scratch or adjust their current one if they want to receive payments from April 6. Once a claim is put in, then the Child Benefit is backdated by three months or to the child’s date of birth, whichever is later.
Claiming Child Benefit means that the parent will also receive National Insurance credits which count towards their state pension. It also means their child will automatically receive a National Insurance number when they turn 16 years old. You can apply for Child Benefit through Gov.uk here – you will need a Government Gateway account to put in a claim.
