A taxpayer contacted HMRC as they were confused about a letter they had received
HMRC has shed light on how being on a certain DWP benefit can help increase your state pension entitlement. The helpful rule came to light after a taxpayer’s query on social media.
A member of the public reached out after receiving a letter about the High Income Child Benefit Charge, expressing confusion over the matter. They said: “We stopped the Child Benefit due to my wage increase but then we received a letter stating that we are entitled to claim, even though I had to pay back over £1,000. We’re totally lost with it all.”
Clarifying the issue, HMRC outlined the workings of the charge: “For the current year, if you earn more than £60,000 you start to have to pay some of the Child Benefit back, and at £80,000 you pay all of it back.” Taxpayers should note that these limits apply to each person’s individual income within a household rather than your total household income.
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HMRC also highlighted an opportunity for couples to enhance their state pension via these regulations. The department advised: “If one of you is not in employment at all, claiming the Child Benefit in their name would give them National Insurance credits (NI) towards the state pension.
“You are able to claim, but not actually receive any money, just the NI credits. If you did that, you wouldn’t have to file a tax return.” If you claim Child Benefit, NI credits are automatically awarded if you have a child under 12, and if you do not pay National Insurance contributions.
To qualify for the full new state pension, which currently stands at £221.20 per week, an individual typically requires 35 years of National Insurance contributions. The current Child Benefit rates are £26.05 weekly for your eldest or only child, and £17.25 weekly for each other child.
This benefit goes out every four weeks, either on a Monday or Tuesday. Turning to other benefits-related news, the Government has announced that eligibility for the Winter Fuel Payment will be broadened from next year, enabling all state pensioners to qualify.
However, those earning over £35,000 will be required to repay it through HMRC. At present, you must be of state pension age and receiving a specific means-tested benefit such as Pension Credit to qualify. The Winter Fuel Payment was valued at £200 or £300 this past winter.
Further details regarding next winter’s payment will be released at the end of June 2025.
