I earn £65,000. Do I have to start receiving child benefit again after the change in the rules?

I am a full-time working mother and earn £65,000 a year, while my husband, who works in a care home, earns around £27,000.

We have two children aged 6 and 4. When my first daughter was born I earned less than £50,000 and therefore initially received child benefit.

Then when my salary went up I stopped taking it and haven’t claimed it again for the last four years – although in retrospect I think I should have tried to claim some of it while I was on maternity leave as it really would have helped.

A friend told me that the rules for child benefit have changed in the budget and that I should now be able to get some and that it would be worth taking it again.

How do I do that and is it worth it that I have to pay something, for example do I have to file a tax return?

Angharad Carrick from This Is Money says: The high income tax for child benefit has been a controversial issue since its introduction by George Osborne in 2013.

Previously, the government clawed back child benefit from households where the highest earner had an income of more than £50,000, and withdrew it entirely if they earned more than £60,000.

This meant that a household with two parents earning £49,000 each would receive child benefit in full, while for a household with one parent earning £50,000, child benefit would be partially or completely withdrawn.

Unlike other taxes, this was based on total individual income rather than the household, so higher earners suffered most.

While income tax and national insurance for someone earning £50,300 is 42 per cent, the abolition of child benefit means the marginal tax rate for a parent with one child is 54 per cent, while for a parent with two children it is 63 per cent. For parents with three children, this rises to 71 percent.

All of this meant that many parents, like you, didn’t bother to sign up for the self-assessment and fill out a tax return to claim child benefit.

However, last month the child benefit rules were changed, increasing the threshold at which child benefit is abolished to £60,000, and the threshold at which it is withdrawn to £80,000.

Under these new rules, you would have to pay back some child benefit because you earn more than £60,000. Under current rules, you will be charged 1 percent of your child benefit for every £200 of income over £60,000.

Is it worth applying for child benefit again? We asked the experts.

Shaun Moore, tax and financial planning expert at Quilter, says: Because your income is €65,000, you must repay part of the benefit. This amounts to approximately 25 percent of the child benefit you receive.

So for two children, the child benefit rate is approximately €2,212 per year, but you will have to repay approximately €553 of this due to costs, leaving you with €1,659.

Because you have not claimed child benefit for four years, you will need to apply again via the HMRC child benefit page or download the HMRC app and apply via this page.

Child benefit can be applied for retroactively for a maximum of three months. So if you apply for child benefit now, you can receive payments from February 2024.

says Robert Salter, partner at Blick Rothenberg: In general, I would encourage anyone who is eligible for child benefit – even if some of it is reclaimed – to apply for it proactively.

There are a number of reasons to do this. First, why would you give up money you are legally entitled to?

And secondly: what happens if your income suddenly drops during the course of the year and, for example, your income falls below the applicable limits?

This is a clear risk for the self-employed, but it can also occur if one of the following situations occurs:

• You receive a significant portion of your income based on commissions, bonuses, etc. and these can vary from year to year
• You are ill for a significant part of the year; or
• You are fired or have fewer working hours;

The rules for applying for child support generally allow a retroactive application to be made only up to three months after the application date.

If you suddenly become ill and are not paid (for example because you are self-employed) or lose your job, you will not necessarily be able to claim child benefit retroactively for the entire tax year.

Claiming the benefit in the first instance and possibly having to repay it (partially) is – simply put – a kind of insurance.

Filing a tax return

Angharad Carrick says: Since you have to pay back 25 percent of child benefit, approximately €550 of your current salary, you must file a tax return for 2024/25.

This means you have to register for self-assessment, which is quite simple.

You’ll have to go to the government website and reactivate your account. Please ensure you have your Government Gateway details and unique taxpayer reference number to hand.

Robert Salter says: Although you will be required to complete a UK tax return for 2024/25 in due course, I would like to emphasize the following:

Tax returns do not need to be filed with HMRC until January 31, 2026 – so you will automatically have ‘access’ to child benefit funds for a significant period of time before any repayment is required; And

If the only items that need to be included on the tax return are your salary and child benefit claims, you should be able to submit your tax return to HMRC yourself. There should be no need to pay an accountant to prepare a tax return, for example.

If you are concerned about being able to repay the 25 percent of child benefit that you would have to repay in this case, come January 2026, when the tax return is due, for example because you are afraid that you would have spent the money the money, you can ask HMRC to make an adjustment to your PAYE tax code to recognize the money to be paid back.

This should ensure that you have paid broadly the correct amount of tax at the end of the tax year, including any adjustments required due to child benefit clawbacks.

Reduction in your adjusted net income

Angharad Carrick says: Before you consider whether to claim the money and file a tax return or opt out, it’s worth looking at what counts towards the higher income limit and some ways to reduce it.

The child benefit is applied to the adjusted net income, excluding the value of, for example, pension or donation contributions to charities that you pay.

Charlene Young, pensions and savings expert at AJ Bell says: If you make your own payments into a company or personal retirement plan, be sure to deduct them from your income, as this may give you the chance to get the full amount of child support back.

For example, someone earning a pre-tax salary of £65,000 could contribute £4,000 to a pension, which is automatically increased to £5,000 thanks to the £1,000 automatic tax relief.

This not only means an extra £5,000 in their pension pot, but also £5,000 deducted from their adjusted net income.

Their adjusted income would amount to £60,000 and they would receive the full value of child benefit back. As a higher rate taxpayer (40 percent), they could also claim an additional £1,000 tax credit by contacting HMRC.