Many people who haven’t historically claimed Child Benefit – because the income of someone in the household was too high – will probably now be eligible, according to a tax and advisory firm.
Robert Salter, an employment and expatriate tax service director at Blick Rothenberg said: “Lost income associated with the Covid-19 pandemic means that many families, who haven’t historically claimed Child Benefit in respect of their minor children, because one of them has had an income above £60,000 per annum, should reconsider their position in this regard.
He added: “However, it is only possible to claim Child Benefit retrospectively for a period of 3 months – so people need to claim now (or in the near future), of they could lose money the family is entitled to.
Salter said: “Child Benefit (£21.05 for the eldest child and £13.95 for subsequent children) is available to all families in theory, but from a practical perspective, is only in full, where the highest earner in the family earns under £50,000 per annum.
“Where the highest earner in the household has income between £50,000 - £60,000 per annum, the Higher Income Child Benefit Charge (HICBC) – a tax clawback – gradually reduces the real value of Child Benefit to £nil. The HICBC has meant that many families who have traditionally had at least one earner earning over £60,000 per annum have simply waived their entitlement to Child Benefit – e.g. to avoid subsequent tax return filing requirements.”
He added: “However, with many employees being furloughed on reduced salaries and the self-employed subject to income losses, many families who have historically opted out of Child Benefit may now become entitled to Child Benefit again – whether in full or in part.
“Whilst furloughed salaries and payments under the Government’s Coronavirus Self-Employed Support Scheme would be considered income for Child Benefit purposes (along with regular salary, self-employed profits, letting income and the like), many families will still have the highest earner having significantly lower incomes in 2020/21 than has previously been the case.”
Salter said: “some families might be tempted to wait for a few months, to see how long the Coronavirus lockdown lasts and get a better understanding of what their income could be for 2020/21. But it is only possible to claim Child Benefit retrospectively for a maximum period of 3 months. So, unless they are careful, many families could lose money they are validly entitled to needlessly.
He added: “If the position is unclear, claim the Child Benefit now – if one’s income subsequently is higher than £60,000 for the year, one can always settle the position via filing a tax return and paying the HICBC.”
