New child benefit rules will affect many families with children, but most of us are finding the changes hard to get our head around. What do the child benefit changes mean? Do I still qualify? How much child benefit will I get?
Find out how the changes to child benefit will affect your family
This guide breaks down any concerns and queries you have about the child benefit cuts that come into force from 7 January 2013. If there's anything that's not answered, email us on firstname.lastname@example.org and we'll find the answer.
What is child benefit?
If you have a child you can claim this tax-free payment to help financially support your family budget. You are entitled to claim for each of your children until they are at least 16 years old.
How much is child benefit?
The current child benefit rates are as follows: £20.30 a week for your first child, and £13.40 per week for each of your other children. There's no cap on the number of little ones you can claim the support for.
Before the government cut child benefit for better off families, this meant that child benefit was worth around £1,000 a year to all parents with one child, £1,700 to those with two kids and £2,500 to parents with three.
However from 7 January 2013, if one partner earns £50,000 or more, this level of child benefit is progressively reduced. (See below for details).
Find out exactly what you’ll be entitled to once the child benefit changes take place by looking at our simple child benefit break down.
What are the changes to child benefit?
In March 2012, the Government released its new Budget, which included changes to the child benefit system. These changes mean that from 7 January 2013 the amount of child benefit you receive will be dependant of your taxable income.
Rather than an ‘all or nothing’ method of assessing eligibility, as was originally suggested, the Government has introduced a phased approach.
The changes to child benefit payments occur once either you or your partner earn more than £50,000 a year. Here’s how the changes are broken down:
Up to £50,000
If one of you or both of you earn up to £49,999 each, then you will be unaffected – you’ll still receive your full amount of child benefit.
If you or your partner earn more than £60,000, you will lose your child benefit. You should still apply for child benefit, which you’ll still receive, but you’ll just have to pay back the equivalent amount as a ‘charge’ in your tax returns – so the two amounts will cancel each other out. You will be required to submit a tax return and make the payment via the self-assessment tax return process. HMRC will automatically send you a tax return for completion and payments for 2012/13 will be due by 31 January 2014.
If either you or your partner are earning over £60,000 you can choose not to receive child benefit to simplify the process, but this is not recommended because it could impact your National Insurance credits and your future entitlement to State Pension.
So you should ideally continue to complete claims for any new children even though you will not receive any child benefit payments for them. For each week that you are entitled to child benefit, you could qualify for National Insurance credits, which can help protect your pension entitlement. This is important until your youngest child reaches the age of 12 (as you can get credits if you’re entitled to child benefit for children under 12).
Between £50,000 and £60,000
If you or your partner earn between £50,000 and £60,000 a year, child benefit will gradually be taken away from you. You’ll still receive your child benefit payments, but you’ll just have to repay some of these via a charge in your tax returns. The higher your earnings, the higher the charge you will pay – so the lower the amount of child benefit you will be able to keep.
So how much child benefit will you be able to get? The simplest way to think about it is by example: If your taxable income is £55,000 you will receive a charge equivalent to 50% of your child benefit. The 50% is because you have income of £55,000 – half way between £50,000 (the point where your child benefit payments are reduced) and £60,000 (the cut-off point for child benefit). If your income was £52,000 you would lose 20% of your total child benefit.
Find out exactly how much child benefit you’ll receive with this simple child benefit break-down.
IMPORTANT: What counts as 'income'
Confusingly, the income that counts as your £50,000 limit is NOT just your salary, but your ‘net adjusted income’. This is your gross income before tax from all sources - so it includes things like income from rent and investments.
So if you have a £45,000 salary but earned £10,000 from rent each year, you would be over the £50,000 child benefit threshold. For more information, see our article how to keep child your benefit - it explains exactly what 'net adjusted income' is, and how you can work out your level of net adjusted income.
When do the new child benefit rules start?
The new child benefit rules are enforced from 7 January 2013.
Your income for the whole of the tax year 2012/13 (which runs from 6 April 2012 to 5 April 2013) will be considered. If this falls above £50,000, then the child benefit received from 7 January 2013 until 5 April 2013 will come with a charge i.e. only part of the year’s child benefit will be limited based on a full year’s income.
For the following year, the child benefit charges will be applied for the full year.
What do I need to do if I’m affected by the child benefit changes?
You should have received a letter around autumn time if you are potentially affected that outlined your options and guidance as to what will happen next.
If you think you may be affected by the changes but haven't received a letter, don't panic. HMRC has a useful tool that will help you find out if you're affected by the changes. If you're in any doubt, HMRC have a helpline on 0845 302 1444.
Anyone who is affected by the child benefit changes will need to fill in a self-assessment tax return. The first one will need to be submitted on 31 January 2014 (this will cover any payments received between 7 January 2013 and the end of the tax year, 5 April 2013).
Then for child benefit payments received in the 2013/14 tax year, you will need to fill in a self-assessment form by 31 January 2015.
If you're not sure how to go about submitting a self-assessment tax return, HMRC has some guidance here. If you still find yourself struggling, you can call their child benefit helpline on 0845 302 1444.
Once you know whether you stand to lose any of your child benefit, you can then take that into account when budgeting for your family.
When to claim child benefit?
You can claim child benefit as soon as your child is born, or from the date you are responsible for the child that comes to live with you. If you adopt a child you should apply for child benefit as soon as possible (even before the adoption process is complete) as you may qualify for child benefit before the adoption period begins. If you foster a child, you may claim child benefit as long as the authorities are not paying for the child’s accommodation or maintenance.
Who can claim child benefit?
You can claim child benefit if you’re responsible for a child aged 16 or under, or over 16 and under 20 but still in full time education and/or if you support them financially.
However if you or your partner earn a salary of over £50,000, then the level of child benefit you receive will be less. The changes are explained here.
How do I claim child benefit?
Child benefit can be claimed by filling out a form and sending it off. Your benefit will be backdated for up to three months from the date the Child Benefit Office receives your claim. It’s best to act early to make sure you don’t lose money.
Where can I find the child benefit claim form?
If you haven’t already received your child benefit claim form via your ‘Bounty Pack’ that is given to new mums in hospital, you can go online to the government website or call the child benefit helpline on 0845 302 1444.
Where do I send my child benefit claim form?
Once you've completed your claim form, send it along with their birth certificate, to:
Child benefit Office (Washington)
PO Box 133
Documents you need for the child benefit application process
You’ll need either an original birth certificate, birth certificate of adoption or adoption certificate. If you don’t have this straight away you can send the claim form in the meantime and send the certificate at a later date.
When do I get child benefit payments?
You should get a decision on your claim and the first payment within 12 weeks once the child benefit office has checked everything.
Child benefit payments should be made into your account usually every four weeks. It’s easy to check online to find out when your next payment is due by using your child benefit number.
Can child benefit be backdated?
Only for three months from the date child benefit office receives your claim.
How do I get child benefit payments?
You can receive child benefit payments via your bank, building society or National Savings and Investment (NS&I) account that accepts Direct Payment.
When does child benefit stop?
During your child’s final year at school you’ll receive a letter from the Child benefit Office. This will ask what your child’s plans are. Once you know whether your child is staying in education you should reply. Depending on age and education plans, child benefit could continue past the age of 16. Take a look at the qualifying terms for more information.