We are well aware of the charge on high earners for the Child Benefit allowance, which has been in place since 2013. This means that those earning over the £50,000 have a charge which means that the benefit is completely lost for those earning more than £60,000.
Individuals have the option to opt out of the Child Benefit payments in order to stop this charge arising and many clients affected by this have now chosen to do so.
Always register for the Child Benefit Allowance – even if you later need to opt out…
However, it is important that new parents, even if high earners, do register for the Child Benefit allowance and then opt out. This is to ensure that any stay at home parent with a child under the age of 12 can retain their National Insurance record.
It has become clear over the years that many parents are choosing not to register because of the additional tax charge and are subsequently finding that their National Insurance record is not up to date. Currently, for class 3 National Insurance, payments can only be back dated by 3 months and there is the potential for many years of credit to be lost.
We therefore always encourage our clients to register for the benefit and then, subject to their individual positions, apply to opt out.
If you believe that you are in a position that could be impacted by the above and have not claimed the Child Benefit with your young child, please do get in contact and we will assist you and explain how it will impact on your later state pension.
Posted by Lucy Orrow
Disclaimer
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.