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State pension UK: Parents could be missing out on up to 12 years of entitlement – are you?

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The rules for the UK state pension are complex, however in simplistic terms, the payment is tied to a person’s National Insurance record. To get any state pension, a person will usually need at least 10 qualifying years on their National Insurance record.

It may be they can get National Insurance credits, for instance.

“You may get National Insurance credits if you cannot work – for example because of illness or disability, or if you’re a carer or you’re unemployed,” the Government states.

An example of this is getting National Insurance credits by claiming Child Benefit for a child under 12 – or under 16 before 2010.

A person can also get the credits if they Jobseeker’s Allowance or Employment and Support Allowance, or Carer’s Allowance.

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Some families may opt to waive Child Benefit due to the High Income Child Benefit tax Charge (HICBC).

Chartered financial planner Sean McCann, from financial advisers NFU Mutual, addressed the topic of the tax earlier this year.

He said: “If you’re the highest earner in your household with an income of more than £50,000, and you or your partner claim Child Benefit, you’ll need to pay the Child Benefit tax charge.

“For every £100 of income you have over £50,000 you pay one percent of the Child Benefit.

“Once your income reaches £60,000 you repay the full amount.

“You can become subject to the charge if you moved in with someone who is claiming Child Benefit, even if they’re not your children.

“The good news is, anything you’ve paid into your pension is knocked off your income before the charge is assessed.

“If it reduces your income below £50,000 you won’t need to pay the charge.

“Be warned, you can be fined if your income is over £50,000 and you don’t pay the tax due.

“HMRC has collected £18.9million in fines from people who failed to pay the High Income Child Benefit Tax Charge since its introduction in 2013.

“More than 500,000 families with children have opted out of receiving Child benefit to avoid having to pay it back.”

For these people, many warnings have been issued by the Government and financial experts.

The Government website, for instance, states by claiming Child Benefit, a person can “get National Insurance credits which count towards your state pension”.

The warning adds: “If you choose not to get Child Benefit payments, you should still fill in and send off the claim form.”

On the CH2 form, parents and guardians can declare they wish to waive the payments, but tstill get the NI credits.

It’s something which Kay Ingram, Director of Public Policy at LEBC Group, has warned about.

“Parents not paying NI contributions through employment or self-employment may claim credits, which are automatically provided when claiming Child Benefit,” she said.

“To ensure the NI credit isn’t wasted it is essential that the adult who is not paying NI through employment or self-employment claims the Child Benefit. Credits continue until the youngest child is 12.

“Parents who have waived the benefit due to the High-Income Child Benefit charge can also claim the NI credit by applying for Child Benefit but then waiving payment.”

According to Mr McCann, it could make sense for some to consider restarting a Child Benefit claim.

“If you think the income of the highest earner in the household is likely to drop below £60,000, it makes sense to restart a claim,” he said.

“If your income is below £50,000 in the current tax year, you won’t be subject to the charge and will keep the full amount of Child Benefit you are entitled to.

“Worth up to £2,500 per annum for a family with three children, Child Benefit won’t be restarted automatically – it needs to be actively claimed.”



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