What is Child Benefit and how does it work?

Research published by the government in April 2024 revealed a noticeable decline in the number of families claiming Child Benefit in the year leading up to August 2023.

It’s thought that the main reason for this decline is the High Income Child Benefit Charge (HICBC), which may be putting high-earning families off claiming. There’s also speculation that the COVID-19 pandemic has played a part in reducing awareness of how Child Benefit works.

We aim to unravel the confusion and provide all the information you need to decide whether claiming is right for you.

Child Benefit is designed to help with the cost of raising a child

Child Benefit is a form of financial assistance provided by the government to support people with children.

Its purpose is to help with the costs of raising a child, such as food, clothing, and other essentials. It is typically a tax-free payment and is available to most parents or guardians.

How much you receive depends on how many children you have

Child Benefit is paid at two rates. These are based on the number of children you have. You’ll receive:

• £25.60 per week for your eldest or first child
• £16.95 per week per child for any other children you have

It’s usually paid into the account of the person responsible for the child every four weeks (typically on Monday or Tuesday). If you’re a single parent or receive certain other benefits, you can arrange for Child Benefit to be paid weekly.

While there's no cap on the number of children you can claim for, Child Benefit does count towards the overall benefit cap. If you’re affected by this, you’ll receive the full amount of Child Benefit. But other benefits you receive may be reduced.

Most parents and guardians are eligible for Child Benefit

You will usually be eligible for Child Benefit if you are responsible for a child under 16 (or under 20 if they are in approved full-time education or training) and any of the following apply:

• You are the child’s biological parent
• Your child is adopted
• You’ve fostered a child
• You’re looking after someone else’s child

Child Benefit can only be paid to one person per child. If a child’s parents live separately, it will usually be paid to the person who the child lives with most of the time and who spends the most on their care.

Some situations and life events may change your eligibility for Child Benefit. For example, if you move in with a new partner who has children of their own.

Read more about eligibility for Child Benefit. 

If you’re a high earner, you’ll pay tax on the Child Benefit you receive

If either you or your partner are high earners, you may need to pay the High Income Child Benefit Charge (HICBC). This is a tax on the Child Benefit you receive.

You will start to pay the HICBC if your annual adjusted net income (total taxable income before any personal allowances and after certain tax reliefs) is over £60,000. The more you earn, the more the HICBC will cost you. By the time you earn £80,000, the HICBC is equal to the amount of Child Benefit you receive.

Example: In the current tax year, if you earned £80,000 (with no tax deductions), you could claim £1,331.20 for your first child. However, the HICBC tax would equate to £1331. This tax would increase relative to any other children, and therefore cancel out any monetary benefit received.

You can use this Child Benefit tax calculator to work out whether you might need to pay the HICBC, and if so, how much. If you need to pay it, you’ll do this by registering for and completing a Self Assessment.

Claiming Child Benefit is about more than the money

Money aside, there are other, lesser-known reasons to claim Child Benefit, whatever your income.

National Insurance credits

If you have a child under the age of 12, claiming Child Benefit means you can receive National Insurance credits.

If you aren’t working, or are earning too little to make National Insurance contributions (for example, if you’re on Statutory Maternity Pay), these credits can prevent you from having gaps in your National Insurance record. This record is used to determine how much State Pension you’ll receive when you reach retirement age. If you have gaps in your National Insurance record, you may receive a lower State Pension.

For this reason, it’s worth claiming Child Benefit even if you or your partner earn enough that you’d need to pay the HICBC. In this situation, you can claim Child Benefit but opt out of receiving the money. You’ll still receive the National Insurance credits but won’t need to pay any HICBC.

Should you not need any National Insurance credits, it may be possible to transfer them to a partner, or another family member who provides care to your child.

Getting your child’s National Insurance number

If you choose not to claim Child Benefit, your child will have to apply for their National Insurance number online when they turn 16 years old. This can take up to four weeks – longer if they need to prove their identity.

Claiming Child Benefit, even if you choose not to receive the money, means your child will receive their National Insurance number automatically. This will save them – and you – a job years down the line.

You can claim Child Benefit on paper or online

With all this in mind, it’s important to put your claim in as soon as possible if you intend on doing so.

When your child is born, you’ll likely be provided with a Child Benefit claim form and prepaid envelope so that you can submit your claim.

You can also make a claim for Child Benefit by filling out the government’s online form.

Either claim method can be completed after 48 hours of registering your child’s birth. Payments can be backdated for up to three months.

Sources

https://www.rsmuk.com/insights/weekly-tax-brief/surely-tax-on-child-benefit-shouldnt-be-so-complicated

https://obr.uk/box/the-impact-of-the-pandemic-on-child-benefit-take-up/#:~:text=The%20pandemic%20resulted%20in%20a,in%20the%20new%2Dclaims%20caseload.