Marriage Tax Allowance and Child Benefit

87matchstick

Hi there,

Just a quick one - we had a little baby boy at the start of March, and my wife has been on statutory maternity pay since the start of April for 33 weeks. She will be back in work on full pay in January.

Our initial election was to send our child benefit claim through in her name, but having done the sums I’m concerned that this will increase her earnings to a level where it starts eating into the benefit I would get from transferring some of her allowance over to mine (I’m a basic rate taxpayer).

What I would like to know is whether child benefit counts as earnings for the purposes of the £12,500 personal allowance? Literally asking so I know whether to send a new claim for Child Benefit to make me the beneficiary instead!

Thanks in anticipation of your help!

Malthusian

Child Benefit is not taxable income so it has no effect on transfer of unused personal allowance.

Child Benefit comes with National Insurance credits so if one of you will be below the Lower Earnings Limit threshold for National Insurance, it should be in their name.

87matchstick

Malthusian said:

Child Benefit is not taxable income so it has no effect on transfer of unused personal allowance.

Child Benefit comes with National Insurance credits so if one of you will be below the Lower Earnings Limit threshold for National Insurance, it should be in their name.

Thank you so much, that’s the clarity I was looking for!  

Savvy_Sue

Malthusian said:

Child Benefit is not taxable income

Unless one of you is earning over £50,000 ... 

But assuming that's not the case, then the rest of the answer was spot on. 

Malthusian

Technically it's still the earned income that is taxable, not the Child Benefit.

There are other calculations involving "taxable income", and Child Benefit wouldn't be included in these whether you are over the £50k threshold or not.