Child Benefit - Possible Loss of NI credits

An issue has recently been highlighted in relation to National Insurance credits where the working parent of a couple registers to receive Child Benefit rather than their non-working partner.

Normally, a parent or carer of a child under 12 automatically gets Class 3 National Insurance (NI) credits if they claim Child Benefit (whether or not they actually choose to receive the Child Benefit payments).

However, if the Child Benefit is claimed by the working parent (who will usually already be paying NI), the non-working parent does not receive any NI credits and may therefore lose entitlement to future State Pension.

While NI credits can be transferred between parents of children under the age of 12 using HMRC form CF411A, backdating is normally limited to a single tax year. However, if the time limit has passed the application form should still be completed giving the reason why the person didn’t apply on time. If the circumstances are reasonable HMRC can still award the credits as long as the person meets the transfer conditions. These are:

  • They didn’t reach State Pension age before 6 April 2008
  • The person registered for Child Benefit can’t get credits because their earnings were equal to or above the qualifying earnings factor for that year
  • They were living with the person who was registered for Child Benefit for the relevant period and sharing the care for a child under the age of 12
  • They would have been able to register for Child Benefit if their spouse, partner or civil partner hadn’t registered for it

 

HMRC estimates that “around 3%” of households claiming Child Benefit could be caught in this NI credit trap.

HMRC has recently published an updated fact sheet on adult childcare NI credits.

 

Testimonials

Paul really knows his stuff and has opened my eyes to a few products recently, such as relevant life policies, which offer tax benefits to company owners. He is a great guy and I wouldn't hesitate to recommend him to my clients.

Keith from Towcester

He is helpful, listens and understands my questions and concerns. He seeks out the best alternatives and is mindful of both potential benefits and ongoing costs to me. He acts promptly to secure the right product and is available for any queries.

Steve from Ilkeston
 

CALL US NOW   T: 03452 411102 T: 01908 380505

Alternatively send an email enquiry

Request a Call Back

:

Data protection
You voluntarily choose to provide personal details to us via this website. Personal information will be treated as confidential by us and held in accordance with the Data Protection Act 2018. For more information on how we protect and deal with your personal information, please refer to our Privacy Notice. You agree that such personal information may be used to provide you with details of services and products in writing, by email or by telephone.

 

The information contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers based in the UK. Odyssey Wealth Management Ltd, Registered Office: Home Ground Barn, Pury Hill Business Park, Alderton Road, Towcester, NN12 7LS. Registered in England number; 08756989

facebook