Home Finance DWP state pension warning over forfeit threat and additional £3,094 loss

DWP state pension warning over forfeit threat and additional £3,094 loss


Britons are being urged to “take action” and claim Child Benefit if they’re eligible for it, following changes announced in the Spring Budget.

Doing so can prevent the risk of missing out on thousands of pounds extra per year and a boost to their state pension.

With Child Benefit changes potentially benefitting 485,000 higher earners, experts at interactive investor said: “180,000 families need to take action now to benefit from the changes.”

Under the current rules, many families opt not to claim Child Benefit due to the obligation to repay it later through the High Income Child Benefit Charge.

In addition, many higher-earning families who claim Child Benefit have opted out of receiving payments by ticking a box online.

However, from April, the threshold for the High Income Child Benefit tax charge will be raised from £50,000 to £60,000 – with the benefit all withdrawn when people earn £80,000.

Next year, someone who makes £60,000 who would previously have lost all the benefit, will receive all of it.

HMRC figures indicate that 180,000 families, who are either not currently claiming or have opted out, will be eligible for Child Benefit under the rule changes.

These families include those where the higher earner earns up to £80,000, making them eligible under the new rules.

However, they will need to claim Child Benefit from scratch or untick the box online if they want to receive it.

Alice Guy, head of pensions and savings at interactive investor said: “Thousands of families have opted out of the Child Benefit system and will now have to scramble to opt in again.

“They will need to reapply from scratch or log in online to select that they want to receive Child Benefit. Child Benefit is automatically backdated by three months, or to the child’s date of birth (whichever is later).”

Even those who earn over £80,000 are being urged to check if they’re eligible for Child Benefit as their income is calculated after deducting pension payments and gifts to charity under a gift aid scheme.

Ms Guy said: “Child Benefit is worth up to £3,094 from April 2024 if you have three children and £2,212 if you have two children, which is enough to make a big difference for many families struggling with a rising cost of living.

“While reasons for opting out aren’t explored in the Government’s data, some families may have elected to not receive Child Benefit rather than going through the hassle of paying back the Child Benefit via self-assessment.”

However, Ms Guy noted: “The high level of those not claiming Child Benefit raises concerns that parents are unwittingly missing out on valuable National Insurance credits, which could potentially boost their state pension in future.”

To receive the full rate of the new state pension, people need around 35 years of either National Insurance payments or National Insurance credits.

Ms Guy said: “Claiming Child Benefit gives you a National Insurance credit if your child is under 12 and therefore could increase your state pension when you retire.”

People can check if the reforms will impact their household finances by using our Child Benefit calculator here.

LEAVE A REPLY

Please enter your comment!
Please enter your name here