Navigating the ins and outs of Child Benefit payments and the Tax-Free Childcare (TFC) scheme can be tricky, especially with the High Income Child Benefit Charge (HICBC) making things more complicated. But good news! The Spring Budget 2024 has introduced new rules that could help more families. Let's break down what's changed and how you can benefit.
What is Child Benefit?
Who Can Claim:
You can get Child Benefit if you're responsible for a child who is:
- Under 16
- Under 20 and still in approved education or training
- Living in the UK
Starting April 6, 2024, you'll receive £25.60 per week for your eldest (or only) child and £16.95 for each additional child. Remember, only one person can claim Child Benefit for a child, but you can claim for as many children as you have.
More Than Just Money:
Claiming Child Benefit also gives you National Insurance credits. These credits help you qualify for a State Pension if your child is under 12. Plus, your child will automatically get a National Insurance number when they turn 16.
High Income Child Benefit Charge (HICBC)
How It Works Now:
Before, if you or your partner earned over £50,000, you'd start to lose some of your Child Benefit. You'd lose all of it if you earned over £60,000. The new rules, starting April 6, 2024, change this. Now, you start losing some of the benefit at £60,000 and lose all of it at £80,000.
Example:
Veronique earns £65,000 a year. Under the old rules, she wouldn't get any benefit. But under the new rules, she'll keep 75% of her Child Benefit and only pay back 25%.
What is Tax-Free Childcare (TFC)?
How It Helps:
TFC helps working parents pay for childcare. It's for kids 11 and under, or 16 and under if they have a disability. You set up an online account, pay in money, and the government adds extra. For every £8 you put in, the government adds £2, up to £500 every three months (or £1,000 if your child is disabled).
Who Can Get It:
To qualify, both parents need to earn at least the minimum wage for 16 hours a week. The scheme is available across the UK and can be used with other childcare schemes.
Making the Most of the New Rules
Income Over £80,000:
If you or your partner earns over £80,000, you can choose not to claim Child Benefit or claim but opt out of payments to avoid the HICBC.
Income Between £60,000 and £80,000:
If your income falls within this range, you can still claim Child Benefit and benefit from partial payments.
Check Your Situation:
If you didn't claim Child Benefit before because of the HICBC, it's time to reassess. The new thresholds might make it beneficial for you to start or restart claims.
Future Changes
By April 2026, the government plans to base the system on household income instead of individual income. This change aims to make things fairer and simpler.
Need Help?
Understanding these changes can be challenging. If you have questions or need help, just get in touch.