The most obvious reason for most is the money. However, for those with an income in the £50K+ bracket, due to the introduction of the High Income Child Benefit Charge (HICBC), individuals may decide not to bother claiming. Try not to make this mistake. Whether or not you want or are entitled to the money, register a claim. Why? Read on.
An individual needs 35 full qualifying years of NI contributions to qualify for the full single-tier state pension. One way of making a tax year a qualifying year is by obtaining one of the two types of NI credits: Class 1 – this counts towards the state pension and some contribution-based benefits OR Class 3 – this counts towards the state pension only.
Anyone registered for child benefit for a child under 12 should receive Class 3 credits automatically. This ensures that parents earning little or nothing are able to build up their state pension entitlement.
Problem is, the HICBC has resulted in many parents not bothering to claim child benefit because they figure if a payback is likely, why bother making a claim. What non-claimants don’t realise is that every year during which child benefit (whether paid or not) is claimed or registered for is a qualifying year for the state pension purposes. This is important for a non-working partner of a high-earner.
Consider this – if a person has only one child, the number of qualifying years that may potentially be lost by, for example, a stay-at-home parent as a result of not claiming child benefit is 12. This is just over a third of the total number of qualifying years needed for the full state pension. For a family with multiple children, the potential loss is even more.
What can be done?
If a parent is not currently claiming the benefit, go fill out FORM CH2 ASAP. If parents don’t want to receive the benefit because they want to avoid a future HICBC clawback, they can fill out this ONLINE FORM.
Claims can only be backdated three months so anyone affected should act immediately.