Are you one of the thousands of higher-earning families who have previously not claimed, or stopped claiming, child benefit? You now might be eligible in 2020/21 if your income has dropped due to the Covid-19 pandemic.
Child benefit in 2020/21 is £21.05 a week for your first child and £13.95 a week for each subsequent child, so just over £1,090 for the year if you have one child and an extra £725 for second and further children. The two-child benefits restriction does not apply to child benefit.
Qualifying children are generally those you are responsible for aged under 16, or under 20 if a child is in approved education or training. You need to live in the UK.
Impact of the Covid-19 pandemic
A tax charge effectively eliminates the child benefit claimed if you or your partner’s annual income exceeds £60,000. Where income is between £50,000 and £60,000, child benefit is tapered away.
If your income was previously just over the £60,000 threshold, being furloughed as an employee will see 20% of your income lost unless your employer makes up the difference. The furlough scheme is currently set to run to the end of June but could well be extended.
Self-employed people and directors of owner/managed companies will be hit even worse because there is no compensation for the self-employed earning over £50,000 or for dividend income. Landlords’ rental income will also fall if tenants are unable to pay.
So you could find your income falling below £50,000, meaning full entitlement to child benefit, or partial entitlement where your income now falls in the £50,000 to £60,000 range.
Although you will not know how 2020/21 is going to pan out, you should claim child benefit as soon as possible because a new claim can only be backdated for a maximum of three months. You can reopen a previously closed claim if you notify HMRC.
Details of how to make a new claim for child benefit can be found here, with details of how restart a previous claim here.
If you need any assistance our Chartered Accountants are happy to help, and can be contacted on 0114 266 4432 or [email protected]
