HMRC change to child benefit rules could see thousands £66,000 better off
Over half a million people could be as much as £66,000 better off after the Government announced major change to Child Benefit rules.
The Treasury has unveiled its plans to allow parents, guardians and carers can claim National Insurance Credits for the years they did not claim Child Benefit. Normally you could backdate a child benefit claim for three months, but the proposed changes from the Government will allow parents to backdate claims all the way back to 2013.
HMRC pays Child benefit to parents or other people who are responsible for bringing up a child and is worth £24 a week for the first child and £15.90 for ones afterwards. However, some parents do not claim the benefit as they earn over the threshold of £50,000 - which puts them at risk of tax charges called the High Income Child Benefit Charge.
Parents can get National Insurance credits for a child under 12 by claiming Child Benefit so by not claiming they could be missing out on National Insurance Credits which builds up their state pension entitlement. For a 20 year retirement, those impacted could potentially lose out on over £66,000. Last year, the Government confirmed half a million parents had stopped claiming Child Benefit since 2013 when the High Income Child Benefit Charge was introduced.
The backdating eligibility of this will be closely based on Child Benefit criteria and those eligible will be able to claim the credits from April 2026.
Mum's touching gesture to young son who died leaves Morrisons shopper in tears
The announcement issued by HMRC said: "The Government will legislate to introduce a route for people to apply for National Insurance credits for parents and carers for tax years where they have not claimed child benefit, to ensure that people do not miss out on their state pension entitlement.
"The credit will add qualifying years of National Insurance where eligible which will support future state pension eligibility. Transitional arrangements will ensure those affected since 2013 are still able to claim."
HMRC said applications will be available for six years following the relevant tax year, and secondary legislation will be brought forward “as soon as possible”. According to former pensions minister and now Partner at consultancy firm LCP, Steve Webb, hundreds of thousands of families could potentially benefit from the change.
He said: "It's welcome news that the government is finally going to address the problem of parents missing out on vital credits towards their state pension. It is vital that the new system will be simple to access and widely publicised so that it reaches all those who are currently at risk of a shortfall in their state pension.
"While the announcement is welcome, it is extraordinary that we have had ten years in which people’s state pension records have been damaged by the impact of the high income child benefit charge. Now, the government has had to invent another system to fix the problems caused by their own policy."
Read more similar news:
Comments:
comments powered by Disqus
