Parents affected by the High-Income Child Benefit charge (HICBC) can be forgiven for thinking that there is no point is registering for child benefit if they are only going to have to pay it all back again in tax.

The HICBC applies where the parent claiming child benefit or their partner has income of more than £50,000 a year.

But Child benefit also confers state pension rights and here is the important part, especially if your spouse or partner is not working and not paying any Class 1 National Insurance contributions.

Parents registered for child benefit in respect of a child under 12 automatically receive Class 3 National Insurance credits. Class 3 credits have the effect of making a year a qualifying year for state pension (but not for other contributory benefit) purposes. Therefore, each year that a parent is registered for child benefit for a child under 12 provides one qualifying year for state benefit purposes. A person needs 35 qualifying years for the full single-tier state pension and at least ten to receive any state pension at all.

Failing to register for child benefit can mean missing out on an automatic entitlement to at least 12 qualifying years of State Pension.

If receiving the money and then having to pay it back is a worry, it needn’t be. It is possible to register for child benefit and to elect not to receive payment. This can be done online or by contacting HMRC’s child benefit office.

If you find that your household income changes in the future so you are below the £50,000 threshold, you can restart the payment of child benefit.

Simply Accounting Solutions are here to help, so please contact us if you need further information on this or any other tax related matters.