Opting out of child benefit

mogwai

I was just looking at child benefit info on gov.uk and apparently if you are a high earner you end up paying most of the child benefit back as tax. However you can opt out of receiving child benefit - is there any benefit to doing it either way, ie receiving the benefit and then paying it back as tax, or just opting out of it altogether..??

Nicki

Yes, if one partner is not working and the other partner earns too much for the household to qualify, then you should claim the child benefit and repay it back out of tax, as the non working parent will then have their national insurance record preserved intact which has a knock on effect on how much pension you will be entitled to later.

sweaty_betty

mogwai wrote: »

I was just looking at child benefit info on gov.uk and apparently if you are a high earner you end up paying most of the child benefit back as tax. However you can opt out of receiving child benefit - is there any benefit to doing it either way, ie receiving the benefit and then paying it back as tax, or just opting out of it altogether..??

As I understand it, you're better off claiming then paying it back as tax (I think it's on a sliding scale which starts once you earn £50K, with you paying back the entire amount once you reach £60K) because claiming ensures that you will receive your national insurance stamp for that period.

I think that the history of this was so if one partner (typically the mother) gave up work to care for kids, she would still receive NI contributions which she would need for accumulating her state pension. We have put the child benefit in my OH's name as his work is more unpredictable than mine, so he may not have enough years of NI paid. If either of us individually reached the point of earning £60K+ we would still claim for this reason.

I'm sure that Martin has an article explaining this better than I have if you dig around.

Rebecca01

Wow! I didnt realise there was a difference.
Thanks Everyone

Icequeen99

That is incorrect information.

National insurance credits are linked to entitlement to Child benefit, not receipt of payments.

As long as you have claimed/or make a claim for any new children, you can choose not to have payments (so you don't have to complete a tax return). That will protect your NI contributions.

All of this is explained on the HMRC website. No need to take the word of people on here.

IQ

mogwai

Thanks - I did check out the website but wasn't clear on the benefits of opting out.

pippa80

There's an article about child benefit and tax in the guardian today that might be interesting:

http://www.guardian.co.uk/money/2012/nov/16/beat-taxman-keep-child-benefit

rpc

If you opt out, you won't be forced into self-assessment if you aren't in it already. So if you are a high earning PAYE employee, it makes life a little easier in terms of paperwork.

Mado

Nicki wrote: »

Yes, if one partner is not working and the other partner earns too much for the household to qualify, then you should claim the child benefit and repay it back out of tax, as the non working parent will then have their national insurance record preserved intact which has a knock on effect on how much pension you will be entitled to later.

Scary...:eek:This was never made clear initially (doesn't affect me as we both work).
I thought the form from HMRC was very poor and it claimed that the amount of tax will exceed the benefit received if you or your partner are above the treshold, so beware.

Also, when I talked to them on the phone, they advised me that it would be stopped in January, although there was a chance it wouldn't and I would have to pay it back. Why the hell can't they assume that they could do it right first time around! This is just so poor standards.

DS4215

If you get it and pay it back as tax then you continue to receive it if you lose your job rather than having to wait for a new claim to go through. It might not make a lot of difference but every bit helps