Child benefit claims – furloughed parents
If you have not previously been claiming child benefit due to your income being above £60,000 per year but, have suffered a loss of income in recent times due to the coronavirus pandemic, you may wish to consider whether it would be beneficial to make a reclaim.
It is only possible to backdate a claim by up to three months, so you may need to act now.
Eligibility and the high income child benefit charge
All households with children under the age of 16 are eligible to claim child benefit. However, a high income child benefit charge (HICBC) applies to child benefit payments received by higher earners. The HICBC applies where one parent has adjusted net income of over £50,000 for a tax year.
Adjusted net income is not just your total income and it is possible to deduct pension contributions and gift aid payments from your taxable income. Also, tax free amounts such as income from ISAs do not need to be included.
The HICBC is calculated as 1% of the child benefit received for every £100 of your adjusted net income that exceeds £50,000. Those earning over £60,000 will therefore suffer a claw back of 100% of the child benefit.
As a result, many families with a higher earning parent may have chosen not to claim child benefit as effectively it will later need to be repaid via self-assessment.
However, those that have had an unexpected drop in income in recent times due to the coronavirus pandemic, for example, where they have been furloughed, could now be eligible to claim.
How much can I claim?
From 2020/21, parents can claim £21.05 a week for a first child and £13.95 a week for each subsequent child. This equates to £1,820 for two children over the year. This could, therefore, be a valuable source of additional income for those who are currently receiving less income than expected.
How to claim
If you have not claimed child benefit for 2019/20 but your total income dipped below £50,000 for the year, you may wish to look at making a retrospective claim. It is, however, only possible to back date the claim by a maximum of three months so you may need to act fast to start the claim as soon as possible.
Similarly, if your income for 2020/21 is likely to drop below £50,000 then you may wish to consider applying for child benefit with effect from April 2020.
It may also be worth considering a claim where your income has dipped/is likely to dip to between £50,000 and £60,000 in either tax year, but it should be noted that a proportion of the child benefit will need to be repaid under self-assessment as detailed under the HICBC above.