Should I still claim Child Benefit if we earn too much?

This is the clearest example in the whole tax system of a default that costs people money quietly. A parent at home who never claims Child Benefit because the household income is too high also never receives the National Insurance credit that comes with it, and discovers the gap in their State Pension record thirty years later. The claim and the payment are separable, and separating them is the point.

Step by step

1. Understand which income the charge is based on.Adjusted net income of the higher earner — broadly total taxable income less certain reliefs, notably pension contributions and Gift Aid donations. It is an individual measure, not a household one, which is why two people earning just under the threshold each are unaffected while a single earner above it is.
2. Find the current threshold and taper.The charge starts at one income level and reaches 100 per cent of the benefit at a higher one. The thresholds were changed recently after being frozen for many years, so use the current GOV.UK figures.
3. Claim Child Benefit regardless.Making the claim is what secures the National Insurance credit for a parent with a child under twelve, and it is how the child is automatically issued a National Insurance number at sixteen.
4. Decide whether to receive the payments.You can elect not to be paid while keeping the claim. That avoids the charge and the administration entirely, and keeps the credits. Where the charge is partial rather than total, taking the money and paying the charge leaves you better off.
5. Check who should make the claim.The credit follows the claimant. Where one partner is not working or is earning below the National Insurance threshold, the claim should normally be in their name so that they receive the credit.
6. Work out how the charge is collected.Historically it required a self assessment return. A PAYE collection route has been introduced for some people. GOV.UK sets out the current position, and getting it wrong is a common cause of unexpected penalties.
7. Consider the effect of pension contributions.Because the charge is based on adjusted net income, additional pension contributions reduce the income used for the test. Whether that is worth doing is a personal financial decision — MoneyHelper or a regulated adviser, not a general guide.
8. Revisit it when circumstances change.Income changes, a change of partner, or a child leaving full-time education all change the position. The election not to be paid can be reversed, and backdating rules apply.

Common mistakes

• Not claiming Child Benefit at all — It forfeits the National Insurance credit for the parent at home and delays the child's National Insurance number. Claiming and electing not to be paid achieves the same cash position without either loss.
• Assuming the threshold is household income — It is the adjusted net income of the higher earner individually. Two people earning just below it are unaffected; one person just above it is caught.

Questions people ask