Child Benefit - the lowdown
Child Benefit is money paid by the government to help you with the costs of raising a child. They can be pricey, can nippers.
Only one person can claim for Child Benefit, but claims can be made for each child. Benefits relating to the eldest child work out as £20.70 per week: for ‘the others’ it’s down to £13.70. Benefits are paid until the child turns 16.
How to claim
Claiming Child Benefit’s pretty easy – but as it’s usually for a newborn, and therefore in the midst of nappies, sleepless nights and overbearing relatives (not to mention GIVING BIRTH), the very idea of admin can seem like a challenge.
Best thing to do when you or your partner is expecting is to request a CH2 claim form. Then when you’ve named the littl’un and got a birth certificate, complete the form and send the lot to the Child Benefit Office. Child Benefit can be backdated for up to 3 months, but since processing can take a while it’s best to crack on with your application.
Big bucks mamas & papas
Child Benefit is taxed if your income (or that of your mister/missus) is over £50,000. This is called the HICBC – or less snappily, High Income Child Benefit Charge. It’s collected as part of the Self Assessment process as 1% of the benefit received per £100 earned over the threshold. So at £60,000 income your Child Benefit reduces all the way to zero.
It can be beneficial – if both parents are earning (and one of them more than £50,000) – to declare earnings in a way that ensures each’s income is below the threshold. Bit sneaky but it’ll reduce the tax paid. Talk to your accountant about ways of reapportioning income between you.
It’s possible to elect not to receive Child Benefit. There are some who earn over the threshold who prefer to duck out of receiving the benefit as otherwise they might have to spend a bit of extra time ticking boxes on their Self Assessment return.
But you should still complete the Child Benefit claim form initially – and contact HMRC afterwards asking for no payments. This ensures you get National Insurance credits which mean your state pension isn’t affected.
Other benefits related to kids
They take after you.
You have another chance to make new friends.
You can live your life through them and push them to achieve the things you didn’t.
Seriously, though, it’s worth getting the full picture about how having kids affects you financially. As well as the obvious inability of you or your partner to work for some time (particularly hard-hitting for freelancers), it’s important you understand what maternity allowance you’re entitled to, how maternity pay works, and whether you’re entitled to other benefits.
Child Tax Credits, Statutory Adoption pay and Sure Start maternity grants can make a difference at what can be a financially trying stage of your life.
Speak to your accountant to help get your head around it all.