Child benefit is a tax free payment that can be a big boost to the family budget. You can claim it for each of your children until they are at least 16 years old and it’s really easy to work out at the moment. However, some big child benefit changes are coming.
MyFamilyClub’s Gemma Johnson went to visit Kate and her family to see how the child benefit changes have affected them and explain what these changes could mean for you and your family.
Child benefit is currently a standard non-income assessed payment of £20.40 a week for your first child and £13.40 a week for each child after that.
The Budget 2012 announced some important changes to how child benefit is paid out. From January next year the way child benefit is calculated will be changing.
Child benefit changes explained
- Both you and your partner could earn up to £50,000 a year each and you’ll still receive your full amount of child benefit
- If you or your partner earn between £50,000- £60,000 a year you will still receive your child benefit, however, you have to repay some of this via a charge in your tax returns. The more you earn the greater the charge
- If you or your partner earns more than £60,000 you’ll lose your child benefit. But it’s not that simple. You could still apply for child benefit as this impacts your National Insurance credits and in turn your entitlement to a state pension. Unfortunately you will have to pay back the equivalent amount as a charge in your tax return.
When do the new child benefit rules start?
The changes to child benefit take place from 7 January 2013 and your income for the whole tax year 2012/2013 will be considered. You will receive child benefit if it falls above £50,000 , but you will be charged for the child benefit received from 7 January 2013 to 5 April 2013 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?
Don’t panic, there is no need to act only anything just yet. A letter should be posted to you around autumn time if you are potentially affected and there will be some clear options and guidance as to what will happen next.