Today’s Blog is concerned with what you can claim from our wonderful government if you have children, together with any tax implications, such as the dreaded High Income Child Benefit Charge (HICBIC).
As everyone knows, raising children can be expensive, but according to the charity ‘Action-For-Children’, there is a range of financial support available, with extra support for those on benefits or who have a disabled child or one with special needs. So, what financial help is available from our government?
- Maternity benefits
Statutory Maternity Pay (SMP) is paid for up to 39 weeks, at a rate of 90% of your average weekly earnings (before tax) for the first 6 weeks. However, the following 33 weeks sees a drop in the amount that can be claimed, which falls to £187.18 or 90% of your average weekly earnings (whichever is lower). Also, do not forget, that Tax and National Insurance is still payable and will be deducted at source.
It is also worth noting that a woman can transfer these benefits, in whole or in part, to their partner. If in part, it’s known as Statutory Shared Parental Pay (ShPP) and if completely it’s called Statutory Paternity Pay SPP, with the same rules that apply to SMP also applying to ShPP and SPP.
If, however, the mother choses to be the main career and not share with her partner, he is still eligible to claim for the first two weeks following the birth at a reduced rate of SPP £184.03 per week, or 90% of the employees average weekly earnings, whichever is lower.
- Child benefit
Child benefit is a universal benefit paid to a parent to help pay for anything the child needs, but it can only be paid to one person. You don’t necessarily need to be the child’s parent to receive it, but you must be responsible for that child, such as another relative, most commonly a grandparent.
At present there are 2 Child Benefit rates, £26.05 per week for your first child and £17.25 pw for any subsequent children and there’s no limit to how many children you can claim for. There is however, one exception, with anyone claiming benefits such as Universal Credit, being limited to claiming only for up to two kids and no more. This is a hot issue in Parliament at the moment, but despite the pressure on Kier Starmer to scrap it, this was conspicuously absent from Rachel Reeves’ financial statement last week.
Child Benefit stops automatically on 31st August after your child’s 16th birthday. If, however, your child stays in ‘approved’ education’ Child Benefit can continue to be paid up to their 20th birthday. To see a full list of approved educational and training courses go to https://www.gov.uk/child-benefit-16-19 but be warned, if your child goes to university, this is not on the approved list.
- High Income Child Benefit Charge (HICBC)
This nasty little tax is affecting more and more families because of fiscal drag caused by tax thresholds continuing to be frozen. The HICBC is a tax charge brought in on 1st January 2013 for recipients of Child Benefit payments, or their partners, on higher incomes.
You may be affected by the tax charge if your ‘adjusted net income’ is over £60,000 for the tax year 2024 to 2025 and 2025 to 2026 Your adjusted net income is your total taxable income before any allowances, but there are a number of things that are excluded before arriving at your adjusted income.
The main exclusions include such things as Gift Aid, charity donations, pension contributions and trading losses (for the self-employed), however, any other income, such as interest from savings and dividends has to be added to arrive at your total taxable income figure.
The HICBIC threshold was raised by the government on 6th April 2024 from £50k to £60k. This threshold is now the starting point from which Child Benefit begins to be withdrawn but does not disappear completely until individual claimants earn in excess of £80,000.
The tax charge is tapered and increases gradually for those with income between £60k and £80k.In practice this means that for every £200 you receive above £60,000, you need to pay back 1% of the maximum amount of Child Benefit you’re entitled to. So, if you earn £70,000 a year, you’ll pay back 50% (meaning you’ll still get over £600 a year if you have one child). Once you hit £80,000 a year, the charge will result in 100% of your child benefit being clawed back by the government.
- Family Tax Credits
W.e.f. 5th April 2025, the last government stopped accepting new claimants for Child Tax Credit or Working Tax Credit. The good news is that existing claimants of Child Tax Credits can still claim up to £3,885 per year for the first child, which works out to about £324 per month and for each additional child, you could receive up to £3,235 yearly (around £270 monthly).
Eventually all existing claimants will be switched to means tested Universal Credit or Pension Credit if the carer is retired.
- Universal Credit & other benefit claims
Universal credit replaces six means-tested benefits and tax credits, income-based jobseeker’s allowance. Income-related employment and support allowance. However, this is a highly complex area, which I do not intend to go into in any depth today, save to say that the amount available under these benefits is likely to be greater if part of your claim includes children. Unfortunately, the majority of claimants who are currently claiming benefits will not receive any child benefit for a third or subsequent child.
There are a number of other potential benefits, that may be available to you if you’re a claimant and have kids. The most significant of these is if your child goes to university, as he/she can receive financial assistance through various programs, including student loans, grants, and bursaries. These programs aim to help students cover tuition fees and living costs, with additional support usually available through university hardship funds.
For a more detailed breakdown of exactly what is potentially available, the charity ‘Working Families’ has an excellent information sheet available in plain English : https://workingfamilies.org.uk/articles/financial-help-with-bringing-up-children/
Accountant’s view
Today I have covered the main maternity/child benefits potentially available, but they are constantly being tweaked and can be a minefield to navigate without help. My advice is to approach one of the many charities who specialise in this area such as ‘turn2us’ who have a very good website and the very best of luck in tracking down exactly what you and your children are entitled to.
