High income child benefit charge and state pension
Jun 11, 2019
When the rules for child benefit changed in 2013, a ‘high income child benefit charge’ was introduced, which now applies if one or both parents earn over £50,000. Once your individual income exceeds £60,000 it means that the whole of the child benefit is taxed, at which point you may well be tempted not to bother claiming child benefit at all.
The impact of child benefit on your state pension
It’s important to understand, however, that not claiming child benefit may limit the amount of state pension and other benefits which you can claim at a later date. Under current rules, you must make National Insurance contributions for 35 years in order to receive a full state pension. You can still claim child benefit and yet choose not to receive the payments – this means that you don’t have to pay the tax charge, but that you’ll still receive the associated National Insurance credits for that year and you’ll protect your state pension entitlement.
How to find out your state pension eligibility
Remember that you can check your National Insurance record online on the Department of Work and Pensions website to see:
- what you’ve paid, up to the start of the current tax year (6 April 2019)
- any National Insurance credits you’ve received
- if gaps in contributions or credits mean some years do not count towards your state pension (they are not ‘qualifying years’)
- if you can pay voluntary contributions to fill any gaps and how much this will cost
You can check your state pension online at any time for a forecast of how much you could get. It’s important to check that your history of contributions is as you would expect it to be, so that you can resolve any discrepancies sooner rather than later.
It’s worth noting that grandparents who have ceased working, and who are looking after their grandchildren, may also claim National Insurance credits for that year which will count towards their 35 year contribution history.
The DWP website will also confirm when you will reach state pension age, under the law as it stands. Be aware that Government proposes to increase the state pension age to 68 from 2037.
If you have any queries about child benefit and your state pension then please contact us and we’ll be happy to help.