Families claiming child benefit have been warned about a "tax charge" that could see them having to pay money back to HMRC. Parents or guardians are able to claim £21.80 a week for their first child and £14.45 a week for any additional child.
However those on a higher income could face having to pay the High Income Child Benefit (HICB) tax charge. This applies when one parent or guardian starts earning over £50,000 a year.
At this point, you have to pay back 1% of the child benefit you receive for every £100 earned above £50,000. Those who earn £60,000 or more have to repay all of their child benefit. However the £50,000 threshold applies only per person, the Mirror reports.
Clare Moffat, pensions and legal expert at Royal London said: “More and more families are being caught by this tax charge as the earnings threshold hasn’t changed since it was introduced. If it had increased with inflation then the starting amount would be over £63,000.
"It can also feel unfair as you could have a couple earning £49,999 each and the charge wouldn’t apply but it would apply if there was only one earner in a household and they earned over £50,000."
If you don't want to pay the charge, you can opt out of child benefits payments altogether by contacting HMRC. However, claiming child benefit can help boost your state pension in later life if you’re not working.
Someone who receives child benefit for children under the age of 12 is also treated as if they had paid National Insurance contributions. You need a certain amount of NI credits to claim the state pension in later life.
Currently you need at least 10 years’ worth of NI contributions to get any state pension, and 35 years to get the full new state pension.
Around 340,000 parents end up having to pay back some or all of their Child Benefit or end up being slapped with a fine. You can use this Child Benefit tax calculator or call HMRC on 0300 200 3100 if you’re unsure if you need to pay the HICB charge.
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Who is eligible for child benefit?
You need to live in the UK and be responsible for someone under the age of 16, or under 20 if they’re in approved education or training, to claim child benefit.
Being responsible for a child usually means they live with you, or you pay at least the same amount as child benefit towards looking after them. If two people look after a child, only one person can claim.
You can claim child benefit if you fostered a child, as long as the local council is not paying anything towards their accommodation or maintenance. It is also available if your child is adopted, as well as in certain circumstances where you're looking after a child for a friend or relative.
