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Child Benefit & NICs

edited 30 November -1 at 1:00AM in Benefits & Tax Credits
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gininteacupsgininteacups Forumite
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edited 30 November -1 at 1:00AM in Benefits & Tax Credits
Hi there, my other half has received Child Benefit for a number of years and I have paid this back via self-assessment calculations as I’m over the threshold.

I would like now to stop my partner receiving but have read that it could affect her NICs? She does work part time and does make NICs via PAYE – would there be any good reason to carry on receiving whilst she remains employed?

Thank you for any guidance that you can offer.

Replies

  • If she is already paying class 1 NI through her employed earnings then there is no need to receive the NIC benefit from the Child Benefit. As far as I understand it, all Child Benefit does regarding NIC is reduce the number of qualifying years someone needs to receive full pension, you don't actually get a credit like the old Home Responsibilities Credit so if you are already paying NIC then it wouldn't reduce your overall qualifying years by receiving Child Benefit in the same year i.e. the paid NIC cancels out the requirement for the reduction in qualifying years - does that make sense?

    You need 30 years of NIC for full UK pension. Say you worked for 5 years then had a baby and returned to work immediately (forget legislation on returning to work for this example). If you go back part-time AND pay NIC through employed earnings for 5 years whilst at the same time receiving Child Benefit then you have a balance of 20 years to continue to pay NICS to qualify for your full state retirement pension. If in the same example you work for 5 years then leave for a 5 year career break whilst you raise your family, you will still have 20 years to continue to pay NIC to qualify for full state retirement pension.

    As far as I can see there's no benefit to continue to receive it.
  • gininteacupsgininteacups Forumite
    16 posts
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    That's a great help - many thanks for taking the time.
  • M_PythonM_Python Forumite
    176 posts
    You need 30 years of NIC for full UK pension.

    Isn't it 35 years now?
  • xylophonexylophone Forumite
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    Your OH can apply for a state pension forecast from DWP.

    https://www.gov.uk/check-state-pension

    This will tell her the position in regard to new state pension.
    As far as I understand it, all Child Benefit does regarding NIC is reduce the number of qualifying years someone needs to receive full pension, you don't actually get a credit like the old Home Responsibilities Credit

    Not so - see

    https://www.gov.uk/child-benefit/what-youll-get
    Isn't it 35 years now?

    The OP's partner is in the group transitioning between old and new state pension arrangements.

    The pension forecast will tell her how many years more of contributions or credits are required for a full new state pension.

    Even after this point has been reached she will still need to pay NI (if earning the appropriate amount) while still under state pension age.
  • edited 17 June 2019 at 2:41PM
    calcotticalcotti Forumite
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    edited 17 June 2019 at 2:41PM
    As far as I understand it, all Child Benefit does regarding NIC is reduce the number of qualifying years someone needs to receive full pension, you don't actually get a credit like the old Home Responsibilities Credit

    While receiving Child Benefit for a child under 12 you do get NI credits - that's what reduces the outstanding number of years required.

    As meggierunner says, there is no need to get them through child benefit if the NI is already being paid, or credits earned, through employment.

    Note however that you can simply ask to stop being paid Child Benefit whilst still claiming it. This way the credits are still received but no money is received and therefore no tax liability created. This may be preferable just in case the employment ends for any reason or the hours/earnings reduce to below the level at which NI would be credited.

    In respect of the State Pension amount, even if they already have 35 years of contributions they may not get the full State Pension if they have ever been 'contracted out'. If this is the case earning or paying additional years of NI will increase the State Pension due (up o a maximum of the full amount).
    Information I post is for England unless otherwise stated. Some rules may be different in other parts of UK.
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