When your child is born and either you or your partner has annual income of £60,000 or more, you may decide not to claim child benefit due to the High Income Child Benefit Charge (HICBC) as all of the benefit received would be clawed back. But do you realise that not claiming child benefit can disadvantage both parent and child?
Where a non-working parent (usually the mother) doesn’t claim child benefit, she won’t receive National Insurance (NI) credits while the child is aged under 12 years. This will leave a gap in her NI record, and on reaching state retirement age she may receive a smaller state pension. The new flat rate state pension, paid to people who retire on or after 6 April 2016, doesn’t allow an individual to receive a pension based on their spouse’s NI contributions.
If child benefit is never claimed in respect of the child, on reaching 15 years and 9 months, the young person won’t automatically be issued with a UK NI number. The individual will have to apply for an NI number in order to work, open an ISA account, or receive a student loan.
To avoid these difficulties, you should apply for child benefit on the birth of your child. You can opt out of receiving payment of the benefit by ticking a box on the application form, but this won’t affect your NI credits. If your circumstances change in the future and your income falls below the HICBC thresholds, you can reverse the opt-out and start to receive payments.
For more information, please contact you local GMcG advisor in Belfast (028 9031 1113), Lisburn (028 9260 7355) or Portadown (028 3833 2801).
