- 741,000 families chose to opt-out of receiving child benefit payments, almost double the number ten years ago
- The numbers of families receiving child benefit is at its lowest level since records began*
- Figures highlight that increases to the high-income thresholds were long overdue
*HMRC began producing these statistics in 2003.
Charlene Young, pensions and savings expert at AJ Bell, comments on the latest child benefit statistics from HMRC:
“There’s been another increase in the number of families who are claiming Child Benefit but opting not to receive the money. The total number of families now stands at 741,000 as at August 2023, up 58,000 on the previous year and accounting for over 1.1 million children.
“Families can claim child benefit but elect not to receive the money if they’ve hit the high-income threshold at which it needs to be paid back. This ensures they still get National Insurance credits towards the state pension and other benefits.
“But this doesn’t capture the 47,000 fewer families claiming at all this year, either because one or both partners are over the limits, or they aren’t aware of their entitlement and how to claim.
Source: HMRC
Increases to threshold long overdue
“The starting limit for the child benefit tax charge was £50,000 in August 2023, having been frozen at that level for over ten years. More families were hitting the limit every year because of the frozen threshold and increases to wages. A tax charge would then strip away the payments at a rate of 1% per £100 of extra income, disappearing entirely when one partner earned £60,000 or more.
“The starting threshold was increased to £60,000 in April, but it arguably should have been closer to £70,000 had it been uprated in line with inflation.
“Child benefit is now withdrawn at a rate of 1% for each £200 of earnings over £60,000, meaning eligibility for child benefit is lost entirely where one partner earns £80,000 or more. The biggest winners of the new rules will be households where each parent earns £60,000 because they’ll go from nothing to being able to claim the whole amount – money they’ve either not been claiming or have been having to pay back.
“The threshold increases were implemented hand in hand with a rise in the weekly benefit – to £25.60 a week for the eldest child and £16.95 a week for each additional one.”
