Parents claiming Child Benefit may receive an extra few hundred pounds every year, however, some are at risk of actually losing money if they claim.
Around seven million people in the UK claim Child Benefit which is a monthly payment for anyone with parental responsibilities in the UK. Over the course of your claiming years, you could receive more than £17,000, however, the HM Treasury has recently announced a major shake-up to the system.
The government confirmed that it had plans to tackle the issue of the High Income Child Benefit Charge, (HICB) and the impact it could possibly have on a parent's National Insurance record. However, no further details have been announced yet.
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The Mirror takes a look at what parents are entitled to and what the High Income Child Benefit tax charge actually means.
What is Child Benefit?
Child benefit is cash paid by the HMRC to parents or other people who are responsible for bringing up a child.
The money is available to anyone who has "parental responsibility" over a child under the age of 16 - or 20 if they are in full-time education. It can also be claimed by grandparents, adoptive parents and some foster parents if they have a parental role.
The cash is the government's way of acknowledging the extra costs involved with raising a child and applies to every country in the UK.
How much is Child Benefit?
Child Benefit is worth £24 a week for the first child and £15.90 a week for any additional children.
It also applies for multiple births, so if you have twins born minutes apart then you will get different amounts for them.
If you earn £50,000 a year or under, then you can claim the full entitlement of Child Benefit if the child you are applying for lives with you.
The £50,000 figure only applied to individuals and not to couples - so if you are in a couple then both of you can earn up to £50,000 and still claim. However, only one person can receive the money.
You can start claiming the money as soon as you have registered the birth of a child or they have come to live with you. It can take up to 16 weeks to process your claim and it can only be backdated three months.
What happens to Child Benefit when you earn over £50,000 a year?
If you have a salary of over £50,000 a year, then claiming Child Benefit is not as simple.
If you or your partner earn more than £50,000 a year, you will still get the full amount of child benefit - but you will have to pay some of it back. This is called the High Income Child Benefit tax charge.
When you start earning above this amount, you have to pay back 1% of the Child Benefit you receive for every £100 earnt above £50,000. So, if you earn £55,000 a year, you'll pay back 50%.
Those who earn £60,000 or more have to repay all of their Child Benefit.
As mentioned before, the £50,000 threshold applies only per person. This means if you and your partner both earn £50,000 - so £100,000 annually - then you will not have to pay it back.
If one of you then starts earning above £50,000 then you will.
You pay back what you owe through a self-assessment tax return - if you don't you could risk a fine which could be up to 30% of what you owe HMRC.
If you don't want to pay the charge, you can opt out of Child Benefit payments altogether by contacting the tax office. However, this can impact your state pension in the future if you are not working.
The Government has confirmed that it is working on plans to rectify the issue of missed National Insurance Credits, but no further details have been announced yet.
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