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High Income Child Benefit Tax Charge - NI

Couple opted not to receive child benefit. Is the person who would have received credited with NICs

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If a couple opt not to receive child benefit due to the High Income Child Benefit Tax Charge. Does the person who would have received the child benefit credited with National Insurance contributions for purpose of qualifying for the state retirement pension?

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By Hugo Fair
06th May 2021 18:35

I can't remember the exact piece of legislation for this ... but, Yes.

If you look at https://www.gov.uk/child-benefit-tax-charge/your-circumstances-change you'll find the following:
* "Claiming Child Benefit helps you qualify for National Insurance credits (which protect your right to State Pension) and other benefits like Guardian’s Allowance."
* "You can make a new claim or just protect your entitlement to the above by sending a Child Benefit claim form and ticking the option to ‘not have the benefit paid’."

So ... you should make sure that your client claims Child Benefit BUT elects not to be paid it!

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Replying to Hugo Fair:
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By Southwestbeancounter
07th May 2021 15:00

Hugo Fair wrote:

So ... you should make sure that your client claims Child Benefit BUT elects not to be paid it!

Agreed! Very important Hugo!

I found out about this a few years ago and it's not widely publicised - my client was certainly very grateful for the advice at the time!

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By THE TAX CLINIC LIMITED
06th May 2021 18:43

Thanks Hugo. The issue cropped up this afternoon and I realised that I had a gap in my knowledge. After posting the question I did a search on accounting web and found an article pretty much saying exactly what you have said. I bet that this is something that quite a few accountants don't know, me included until this evening. Thanks again for your help

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Psycho
By Wilson Philips
06th May 2021 18:58

For the avoidance of doubt, I assume that you are distinguishing between asking not to be paid and not claiming?

I ask only because that is where I have seen folk slipping up.

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Replying to Wilson Philips:
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By THE TAX CLINIC LIMITED
06th May 2021 19:14

Hi Wilson. I meant asking not to be paid and you shouldn't do that. Thanks

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By mikeyban
06th May 2021 19:13

Yes... so long as they claimed it in the first place and they have a child under 12 and ... if over over 12 then they will not receive a credit

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RLI
By lionofludesch
06th May 2021 23:08

Yes. You need to claim it and then disclaim it.

Bizarre, isn't it?

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Replying to lionofludesch:
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By Hugo Fair
06th May 2021 23:42

Bizarre, but you can follow the logic ... because it's not what you've said but what I posted earlier ... "you should make sure that your client claims Child Benefit BUT elects not to be paid it!"

If you don't claim the Benefit then HMRC's wonderful systems won't know to credit you with the equivalent 'NI credits' (left over from the days of stamps and not yet modernised)!

But you have to (within that claim) elect not to be paid the benefit so as to avoid the tax charge (a more recent bit of software that has applied what technicians call a 'cludge' to fix the issue)!

However if you "claim it and then disclaim it" you'll end up with no claim (so no tax - hoorah; but no NI credits - boo)!

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By rocket_queen
10th May 2021 11:13

As above, make the claim but opt not to be paid. It is a good idea to do this even if both parents are above the NIC LEL and would not benefit from the credits as your child benefit claim, I believe, it what triggers an NI number being issued when the child reaches 16. It can also be helpful as part of establishing the residence of a child in child custody hearings.

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