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Child benefit is a tax-free payment that is aimed at helping parents cope with the cost of bringing up children. One parent can claim £20.30 a week for an eldest or only child and £13.40 a week for each of their other children. The payments apply to all children aged under 16 and in some cases until they are 20 years old. The system is administered by HM Revenue and Customs (HMRC).
At present, all families can claim. However, this has now changed. In the 2012 Budget, Chancellor George Osborne announced a plan to steadily withdraw child benefit from families where one parent earns more than £50,000. Changes to the rules on child benefit come into force from 7 January 2013.
Families where one parent is earning more than £50,000 a year will no longer be able to claim the total amount of child benefit under government plans. If one of the parents earns more than £60,000, they may choose to stop claiming child benefit, or persuade their partner to do so, and save the tax authority the trouble of getting it back. A parent who earns more than £60,000 and who continues to claim child benefit will be taxed. If they or their partner keeps claiming it, then the higher earner will have to admit this in a self-assessment tax form. Then, HMRC will tax the high earner on the child benefit which they, or their partner, claim. So, the high earner will need to know whether their partner is claiming child benefit because it will be the high earner who is taxed.
HMRC will also let taxpayers ask for rudimentary information from its records to see whether or not their partners receive child benefit, or have an "adjusted net income" above £50,000, and should be paying the new tax.
In the event of a relationship breakdown, both parents might try to claim, even if they live apart, but only one of them will get it. If somebody is responsible for a child, they normally get the benefit for it. So, usually, the parent with whom the child lives receives the benefit. However, the other parent can get child benefit even if their child does not live with them. This would only happen when a) they pay towards their upkeep, b) what they pay is at least the same as the amount of child benefit (so they do not profit) and c) the person the child lives with is not already receiving child benefit.
For further information and advice on this issue, and other family law issues, please contact us for a free initial consultation on 01992 306 616 or 0207 956 2740 or email us.Back to Law Articles