You could get thousands of pounds more in state pension payments
Martin Lewis has urged people to check if they can claim some extra cash through a DWP benefit. It may be worth claiming even if you aren’t entitled to any cash through the scheme, as it opens up eligibility for other support.
The money expert answered questions on his BBC podcast on a host of issues. Topics that were discussed included how to get the best savings rates, direct debits and claiming benefits. One query came in from a man who is soon to have a child, and wanted to know if it would be worth claiming Child Benefit.
The dad-to-be explained that he earns £45,000 while his wife is on £68,000, and wanted to know how this would affect their entitlement. This relates to the High Income Child Benefit Charge. Through the scheme, you can get £26.05 a week for your eldest or only child and another £17.25 for each other child you have.
However, if a claimant or their partner individually earns over £60,000 a year, you have to pay some of the benefit back. You lose 1 percent of your entitlement for every £200 you earn over this threshold, meaning you pay the whole lot back once your earnings reach £80,000.
Mr Lewis explained how this would apply in the listener’s situation: “Your wife is the highest earner, she earns £68,000, which is two fifths or 40 percent of the way through the Child Benefit threshold, between the £60,000 and the £80,000. So she will lose 40 percent of the gain of Child Benefit. It’s linear.”
If the new child is the couple’s only child, they would get £26.05 a week in Child Benefit, or £1,354.60 a year. This means they would have to pay back £541.84 a year back. On the question of how this amount is repaid, Mr Lewis said that if his wife does self assessment, she would pay it back through this.
If she is employed and pays tax through PAYE, Mr Lewis said: “She can now request to have her tax code changed, so that the amount that comes out of the payroll through PAYE actually takes into account the Child Benefit, and claws back that little bit.” However, Mr Lewis went on to say that even if the wife was earning £80,000 or more and they had to pay back the full amount, it may still be worth claiming the benefit for the extra perks.
State pension boost
He explained: “It is the claiming of Child Benefit that triggers the possibility that you get National Insurance credits for childcare. Those National Insurance credits for childcare go towards the combined National Insurance credits that get you the state pension entitlement.”
You typically need 35 years of National Insurance contributions to get the full new state pension, which currently pays £230.25 a week. Payments increase in line with the triple lock policy, with the state pension to increase 4.8 percent this April.
Mr Lewis said another reason for claiming the benefit even if you have to pay it all back is if there is a grandparent who looks after a child unpaid for you. He said: “There is a scheme where you can transfer your National Insurance childcare credit to them if they are looking after a child.”
The expert said he’d had “a lot of successes” pointing families to this scheme. He shared an example: “The grandparents might not have been working for a few years of their life and weren’t entitled to the full state pension, suddenly find that they are entitled to a few more years.
“That builds up and they get to the full state pension. It can be worth thousands of tens of thousands of pounds.” You can check your state pension entitlement on the Government website.
