How to protect your state pension by claiming Child Benefit

Did you know that if you have stopped claiming Child Benefit for children under 12 and either don’t have earnings, or earn less than the NIC threshold, your state pension will be reduced?

Parents earning in excess of £60,000 are no longer entitled to Child Benefit with it being reduced on a ‘sliding scale’ for those earning between £50,000 and £60,000. Many couples elected to cease receiving the Child Benefit rather than having the administration hassle of paying it back at a later date.

However, what many don’t realise is that Child Benefit counts towards National Insurance credits, which determine how much State Pension is received.

The State Pension is based on the number of ‘qualifying years’ built up during an individuals working life; the definition of ‘qualifying year’ being one in which you earn enough to pay NI contributions.

Electing to receive the Child Benefit means you could qualify for weekly National Insurance credits which can protect your future entitlement to the basic and additional State Pensions.

The HMRC website has more information here.

To discuss your situation with an experienced tax advisor, contact Helen Sewell on 01527 558539 or email Helen on [email protected].

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