Is there any point in claiming child benefit? 

Mouthy Money Your Questions Answered panelist, Sarah Coles, answers a reader’s question on the upcoming changes to the child benefit system

Q. Last year I earned over the child benefit threshold and had to pay it back, should I bother claiming again? 

A. If you’re over the upper threshold, you may think there’s no point claiming child benefit, but this benefit is about more than just the payment.

It also opens the door to national insurance credits for anyone who isn’t working – including stay-at-home parents. These count towards the 35 years’ worth of contributions you need to qualify for the full state pension. It’s worth highlighting that the non-working parent should make sure they receive the benefit rather than their partner. 

Instead of contacting the child benefit office and saying you no longer want to claim, you can contact them and say you want to opt out of payments. This means you will no longer receive the money, but you will still receive the credits. 

However, you may not need to opt out of payments either. The rules around when you lose your child benefit will change from 6 April.

At the moment, when one person in the household earns £50,100 or more, they face the high income child benefit charge, which means for every £100 they earn over £50,000, they have to pay 1% of their child benefit back. As a result, if they earn £60,000 or over, they need to repay it all. 

The good news is that the threshold will move in April to £60,000, and the rate at which you have to pay it back halves, so you only need to repay it all by the time one person makes £80,000. This may well mean you get to keep at least some of your child benefit. 

If one person earns over the new threshold, you may be able to cut how much of the charge you pay too, because the system counts your income after you have made pension contributions.

If it works for you to pay more into your pension, you could pay less of the charge, and in some cases may even be able to bring your income back under the threshold. 

For single parents on high incomes, there are more changes on the horizon too. At the moment, a single person earning £50,100 has to pay some of the benefit back, while a couple making £50,099 each doesn’t.

In future, the government plans to take household income into a consideration in order to level the playing field. From a technical perspective this is a major change, so there’s no timetable for it yet, but it has promised this change is coming. 

Sarah Coles has been an analyst with Hargreaves Lansdown for the past five years, after spending 14 years as a financial journalist writing for publications ranging from Bloomberg to AOL Money.

Her areas of expertise include savings and financial planning – covering everything from tax to borrowing, spending and the housing market. She is also co-presenter of HL’s ‘Switch Your Money On’ podcast.

She is passionate about encouraging people to get to grips with every aspect of their finances, not because finance is inherently fascinating to everyone, but so they have enough money for the things that really matter to them in life. 

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