Back in 2013 the rules around child benefit changed, so that if one partner earns more than £60k then child benefit is not due – and if it has been claimed, it has to be repaid. Often this means the mother claims it, and the father has to repay it!!
As a result, many couples who know their income is above this level, see this as a waste of time, and don’t bother to register for child benefit on the birth of their child.
But claiming child benefit, whether it is actually paid or not, is important as it ensures that the claimant (usually the mother) receives a National Insurance Credit for the year.
Why does this matter?
To get the full state pension, you need to have paid NIC or have received NIC credits for 35 years. To get any state pension at all, you need to have a payment record for 10 years. The NIC credits you receive while you stay at home to bring up your children, are therefore important in building up your NI record.
It is possible to claim child benefit, but then to elect for it not to be actually paid to you, and this gets round the hassle of having it paid to you, only to have to pay it back again via self-assessment.
New child benefit claims can only be backdated 3 months, so if you do realise you have a gap in your NI record, it can’t be corrected retrospectively.
Once registered though, if your income for a previous year changes, (eg if you are self-employed and you have a loss one year, this can be carried back to the year before and reduce your income for the previous year) this may mean that you would then qualify for child benefit that year. As long as you are registered, it would then be paid to you. If you had never registered, this would not be possible.
It’s really important to check your NIC record with HMRC – not only to see how many qualifying years you have, but also because HMRC very often get it wrong and you need to correct it. To check your record, you need to set up and log on to your Personal Tax Account – https://www.gov.uk/personal-tax-account
So if you are in a position where either you or your partner earn over £60k, you should still register for child benefit, even if you then opt not to actually receive it, and protect your entitlement to a state pension!
For more information please contact Rosie Forsyth at Wilkins & Co.