Child Benefit could boost your state pension in retirement – but beware simple mistake

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This perk of Child Benefit applies to those whose child is under the age of 12. If the claimant isn’t working or they don’t earn enough to make National Insurance contributions, Child Benefit can provide National Insurance credits, which count towards the state pension.

Even if a person doesn’t claim Child Benefit, those eligible can still get the National Insurance credits.

However it may be some end up accidentally missing out, such as if they’re hit by the High Income Child Benefit tax Charge (HICBC).

This charge affects those with an individual income over £50,000, with the benefit being lost entirely through the tax if a person earns £60,000 or more.

Due to the tax, some may decide to opt out of claiming Child Benefit entirely, in order to avoid needing to file a Self-Assessment Tax Return.

However, to get the National Insurance credits, eligible people need to fill in and send off the claim form.

There is an option on the form to waive the payment but still get the boost to the state pension.

By August 2020, 624,000 families had opted out of receiving Child Benefit.

“The £50,000 threshold hasn’t changed since 2013 meaning more and more families are being caught as incomes increase,” Sean McCann, Chartered Financial Planner at NFU Mutual commented earlier this year.

“While some are choosing to repay the benefit, many more with incomes over £60,000 who lose all their child benefit through the tax, are opting out of receiving the payments altogether.

“As the tax charge is based on income after pension contributions, many families could take themselves out of the charge and continue to receive Child Benefit by increasing the amount they pay into their pensions.”

Mr McCann also issued a warning about the importance of registering for Child Benefit before opting out of receiving the payments.

“It’s crucial families who don’t want the hassle of repaying Child Benefit still register a claim before opting out of receiving payment,” he said.

“This ensures that a non-working parent receives a National Insurance credit, helping to protect their state pension entitlement.”

On top of that, he highlighted the importance of the non-working, or lower-earning, person makes the claim.

“It’s vital that the claim is made by the non-working payment, rather than the high-earning partner,” Mr McCann said.

“Families with non-working parents failing to register for Child Benefit could be counting the cost many years in the future.”

How much is Child Benefit?

There are two different Child Benefit rates, with the amount depending on who the allowance is for.

For the eldest or only child, the weekly rate is currently £21.15.

It’s £14 per child per week for any additional children there may be.

If a person is paid too much or too little, it’s important to contract the Child Benefit Office.

The benefit cap may affect the total amount of benefits a person gets, and this includes Child Benefit.

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