Child benefit is designed to offer financial support to families through regular payments, overseen by HM Revenue and Customs (HMRC). It can be claimed by Britons who are responsible for raising a child, either below the age of 16, or under 20 if they remain in approved education or training. Only one person is permitted to receive Child Benefit for a child, but there is no limit on how many children can be claimed for.
Those who are in receipt of Child Benefit can expect to be paid once every four weeks in this form of regular support.
While a payment can only be received by one person, for two parent families, both incomes will be reviewed.
As a result, due to Child Benefit rules, some families could face a higher Income Tax bill.
Those who earn less than £50,000 a year, can expect to be in receipt of the full amount of Child Benefit to which they are entitled.
The Money Advice Service has explained parents and guardians will be required to pay back one percent of the Child Benefit sum for every extra £100 earned over £50,000 each year.
Individuals who are struggling to work out their tax burden can visit the government’s website and use the tax calculator.
The calculator is free to use and is likely to provide Britons with a bigger picture of their circumstances.
However, there is another instance where an even higher Income Tax bill might be incurred.
This is when parents or guardians earn above £60,000 annually.
In this case, Britons will be required to pay back all of the Child Benefit they receive as Income Tax.
People will still be paid the full amount of Child Benefit each month, however, the parent with the higher income will need to pay the sum back.
Once again, this is done through a Self-Assessment tax return so the extra Income Tax can be calculated by HMRC.
Although a hefty Income Tax bill is likely to dissuade high-income parents and guardians from making a claim, there are certain actions worth bearing in mind.
People can still fill in the relevant Child Benefit form, but choose to forego any payments they would otherwise receive.
The benefit of such an action is that valuable National Insurance credits can be received in certain circumstances.
The government website explains: “The person who claims will get National Insurance credits towards their state pension if they are not working or earn less than £166 per week.”
Therefore, if one parent is earning over the threshold, but another works or has a part-time job paying less than the sum dictated, it is likely to be wise to continue to claim.