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Child Benefit can protect state pension – why those missing out ‘need to act fast’

CHILD BENEFIT will be a welcome form of income which can help to cover the costs that will come with raising a child. It can also protect some people’s state pension – however those affected have been warned to act sooner rather than later.

Child Benefit can be claimed by only one person for a child, and this individual must be responsible for bringing up a child who is under the age of 16 or under the age of 20 if they stay in approved education or training.

The payment is made every four weeks, and there’s no limit as to how many children a person can claim for.

There are two Child Benefit rates, and these depend on who the allowance is for.

Currently, for an eldest or only child, the weekly rate is £20.70.

For additional children, the rate is £13.70.

In addition to the money, Child Benefit can provide some people with National Insurance credits – which will count towards the claimant’s state pension.

If the child is under the age of 12 and the claimant is not working or they do not earn enough to pay National Insurance contributions, Child Benefit can give them National Insurance credits.

They count towards the state pension, and can mean a person does not have gaps in their National Insurance record.

Some people may be taxed on Child Benefit, if they or their partner’s individual income is more than £50,000.

This is under the High Income Child Benefit Tax Charge.

In addition to paying the tax, those affected would need to fill in a Self Assessment tax return each tax year.

It’s possible to work out an estimate of how much a person may need to pay by using a Child Benefit tax calculator.

Once the individual income is £60,000, all of the benefit will be lost through tax.

Chartered Financial Planner and Director of Public Policy at LEBC Group has explained how waiving the payment due to the High Income Child Benefit Tax Charge could see some people lose the National Insurance credits – unless they fill in and send off the claim form.

By doing this, affected people can explain that they want to waive the payment but still require the National Insurance credits.

Ms Ingram told “Child Benefit becomes taxable once partner or spouse’s earnings exceed £50,100.

“Many couples have waived payment of it to avoid tax without realising they are losing state pension credits.

“To reinstate them the stay at home partner needs to claim Child Benefit but tick the box to waive payment of it, this will reinstate state pension credits.”

Ms Ingram also warned members of the public who may be affected by the charge and opt to waive the payment to act sooner rather than later.

“NI credits can only be backdated three months so those missing out need to act fast,” she said.

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