Monday, January 07, 2013

Something you should probably know about the Child Benefit changes

So, I'm not getting Child Benefit any more, as of today. I can't complain, because I can see the sense behind this change.It's better that those earning over £50,000 take a hit than more is taken from those who have nothing, to put it bluntly. If the price I pay means that someone on the minimum wage can get their tax bill halved from the amount Labour charged them, then I can live with it. 

I am well aware that there is an inherent unfairness in the way the new rules apply. Two people earning £49,995, giving a household income of nearly £100k, will still get the full amount of child benefit. However, a family where only one parent is working will start to lose it at £50k. The thing that worried me, though, was that many stay at home parents, usually mothers, are given a National Insurance credit which goes towards their state pension until their youngest child is 12. What would happen to them if they were no longer claiming child benefit? Would they still get the credits towards their State Pension, or would they get a nasty surprise in a few decades' time?

I've spent some time on the phone to various government helplines this morning to find out. The HMRC helpline was very helpful but when I asked the question, the person I was speaking to actually had to go and look it up and actually said she wasn't very sure and recommended that I call the Child Benefit people.She told me that if a claim had been made and the claimant decided not to receive the payments, then they would still get the credits. I then phoned the Child Benefit line and they confirmed this, with a lot less faffing. Now that I've had it from two Government sources, I'm prepared to believe it.

My only concern is that this is all very well if your children are already here and you've made the claim. If, however, you have a baby at any point from now and your partner is a high earner, you might think that you shouldn't even bother claiming. This would be a mistake if you are not going to go back to work. You have to make the claim to get the credit towards your pension even if you don't end up taking the money.

I hope that makes sense. It might not affect very many people, but it's worth taking note.

1 comment:

Andrew Brown said...

A good point, Caron.

I'd just add that the years of NIC payments requried im order for full Basic State Pension to be payable has reduced to 30 years for both Men and Woman, whist working life has increased to 52 years, so this may not pose the same problem it could have done under the old rules.

It does seem sensible still to claim, so a record is in place, though.

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