Should I apply for child benefit? What it costs and the most common traps

Child benefit was once a simple universal payment that went to all those with children, but a shake-up by the former George Osborne turned it into a complicated part of the tax system.

The good news is that the rules governing how child benefit is deducted for higher-earning parents have been relaxed, and more people can now receive payments of £25.60 a week for the first child and £16.95 for additional children.

We explain what you need to know about child benefit, whether you should receive it and why new parents should beware of traps that could lead to them losing their state pension.

Child benefit: how much is it worth?

Currently, child benefit is £25.60 per week for the eldest and £16.95 per week for each additional child.

It is paid if you are responsible for a child under 16 years of age, or under 20 years of age if they are still at school or on an approved training course.

Only one person can claim child benefit per child, but there is no limit to the number of children for whom you can receive payments.

Controversial income thresholds preventing better-off parents from receiving child benefit were introduced in 2013, although these have recently been relaxed and a further relaxation of the rules is expected in 2026.

Changes more than a decade ago also caused problems due to a poorly understood relationship between child benefit entitlement and the state pension.

This has created gaps in some parents’ National Insurance records, but the Government has now promised to fix this problem too.

Apply for child benefit

You can make a claim child benefit or add another child to your application at gov.uk, either online or by downloading and completing a paper form.

Payments are made every four weeks on Mondays or Tuesdays, but you can be paid weekly if you are a single parent or get other benefits such as Universal Credit.

You are expected to report anything that may affect your child benefit, such as moving abroad or moving abroad.

If a family splits, only one person continues to receive £25.60 per week for the eldest child, but if there are two children living with different partners, they will both receive £25.60 per week. For the rest of the children, the amount remains at £16.95.

If you have a mixed family, only the eldest child is entitled to the £25.60 rate and the other children are entitled to the £16.95 rate.

Claiming child benefit means they will automatically receive a national insurance number shortly before turning 16.

Until the child turns 12, the claimant can also receive free National Insurance credits towards their state pension (more on this below).

What are the rules for child benefits for people with higher incomes?

In 2013, the high-income child benefit charge was introduced, which effectively made well-off parents ineligible for child benefit payments.

This removed child benefit if a parent earned between £50,000 and £60,000 through the high-income child benefit charge, creating high marginal tax rates. Once income reached over £60,000, child benefit disappeared completely.

After years of campaigning by parents and websites such as This is Money, the rules were changed in the Budget, but only to increase the disposal thresholds to between £60,000 and £80,000.

However, even if parents lose child benefit, they must apply for it and check the appropriate box to opt out of the payments, or accept the money that the higher earner must fill out on a tax return to get it back.

This is because by registering you will get state pension credits if you need them, and your child will be in the system to receive their NI number.

Until recently, child benefit was reduced for those earning more than £50,000 a year, or eliminated entirely for those earning more than £60,000.

But the rules were relaxed in April this year, and child benefit now begins to be phased out if one member of the household earns £60,000, with payments stopping completely at £80,000.

This means that many more parents may now be eligible for child benefit and some of those who do not receive it should start receiving it again.

However, if the £50,000 threshold had increased with inflation, it would already be £67,000, and if it had increased in line with average wage growth, it would now be almost £72,000.

The rules were criticized from the start because they penalize families where one parent earns just over £50,000, but those where both parents earn just under that amount continue to receive child benefit in their home. whole.

The Government has promised to address this problem by 2026, when the system will move to assessing household income.

The child benefit income rules create high marginal tax rates for parents, who have moved even further up the income scale since the thresholds changed in April.

Those who can afford to save part of their income can contribute more to their pension to reduce their income below the child benefit threshold.

How the holes in state pensions will be fixed

Parents who are not entitled to child benefit and therefore do not apply for it may lose valuable Social Security credits.

At the current state pension rate of £11,500 a year, each credit is worth £329 a year, or £6,500 over a 20-year retirement.

This has become a problem because the number of families claiming child benefit has decreased since the controversial 2013 reform.

Credits are obtained during years when children are under 12 years old. However, many new parents are aware that there is a link between child benefit and the state pension they could receive decades from now.

After rejecting parents’ pleas for years, the Government has promised to allow parents affected by child benefits to repair state pension records by creating a new National Insurance credit which they will be able to claim from April 2026 .

But so far there are few details: no guarantee that these new credits will be accepted will be enough to solve the problem and, in the meantime, pending elections could cause delays.

Until the fix is ​​implemented, parents are advised to make a child benefit claim but tick a box to opt out of payments and only get state pension credits.

Anyone who has not already done so is urged to do so now, rather than waiting for the Government to fix the problem by offering new credit in several years’ time.

For now, your state pension credits will only be backdated for three months when you register late, but you will be in the system and the hole in your record will stop getting any bigger.

Parents who lose credits can recover them before they retire by working and paying National Insurance for enough years, or by qualifying to receive them in some other way, such as being a carer.

But this is not guaranteed, and parents will not necessarily be rich in their own right, or remain married to a partner whose high income disqualified them from receiving child benefit, when they reach retirement age.

What happens if the “wrong” partner claims child benefit?

It is important for a parent who is not working to fill out the child benefit form.

This is because the claimant gains valuable state pension credits, but these are worthless to someone who is employed and already pays enough national insurance.

Many families make this mistake and parents can exchange credits between themselves if the person who initially claimed child benefit does not need them to boost their own state pension record.

There is a time limit on when parents must request to do this retrospectively; They are supposed to apply before the end of the next fiscal year to exchange each credit separately.

However, one couple discovered there is a loophole for late NI exchange applications, provided a strong enough case is made to the taxman, setting an example other parents can follow.

They successfully argued to HMRC that they were unaware that by completing the form she could lose huge sums of state pension in old age.

HMRC has said it will accept late applications from couples who want to transfer credits, although only if they can persuade it that the delay is “reasonable in the circumstances” and meets all other conditions.

Most couples can probably credibly say that they have not understood the dark link between who claims child benefit and the state pension.

Here are the details of the request:

How to exchange state pension qualifying years after 2010

How to exchange state pension qualifying years before 2010

If you request the exchange and are rejected, please contact us and we will try to help you. Email pensionquestions@thisismoney.co.uk and put CHILDREN BENEFIT in the subject line.