Should you be claiming Child Benefit again?
If you have previously dismissed claiming child benefit as your income is over the £60,000 per annum threshold, now is a good time to review your situation and maybe start to reclaim.
Reduction in income
In these unprecedented times, and with the the government’s Job Retention Scheme, many individuals may see their income levels go down. Individuals placed on the 80% furlough scheme who previously earnt £60,000 (or just over) will now be receiving under £50,000 and may become eligible to claim child benefit.
Alternatively, you may see a reduction in your rental or self-employment income.
As it is not known how long such reductions are likely to go on for, or the long-term effects, child benefit may provide you and your family with some extra cash each month.
Child Benefit rates
For the 2020/21 tax year child benefit rates are £21.15 per week for your first child and £14.00 per week for subsequent children. This means a family with two children could be entitled to £1,827.80 a year.
Please be aware however, that a claim for child benefit can only be back dated for three months so you will need to act sooner rather than later to initiate a claim from the beginning of the tax year.
Information on eligibility and how to make a claim can be found on HM Revenue & Customs website.
Submitting a tax return
Should you make a claim and at the end of the tax year your income exceeds £50,000 but is less than £60,000 you will be required to submit a tax return and repay a proportion of the benefit received. The amount repayable is 1% for every £100 earnt over £50,000.
If you earnt over £60,000 the full amount will be repayable via your tax return. The deadline for submitting your 2020/21 tax return online and making the repayment will be the 31 January 2022.
As many families are in different circumstances each case would need to be reviewed on an individual basis. However hopefully this information gets you thinking about other ways you can ease cash flows.
Get in touch
If you have any questions, please get in touch with a member of our Private Client team on 01903 234094.
A version of this blog originally appeared on the website of PrimeGlobal member firm, Larking Gowen.