Martin Lewis’ MSE reveals little-known child benefit mistake that could see you miss out on £1,000s in retirement

MARTIN Lewis’ MoneySavingExpert.com has revealed a little-known child benefit mistake that could cost you £1,000s in later life.

If you or your partner earns over £60,000 a year, you have to pay all of the benefit back which means some don’t claim at all.

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However, claiming child benefit entitles your to National Insurance (NI) credits which count towards your state pension.

This is particularly important if one person in a couple earns less than £123 a week as this is how much you need to earn to qualify for NICs.

Instead, you can claim child benefit in the lower earner’s name and then opt out of the payment, so they get the boost to their NICs.

It could be worth £1,000s a year extra when it comes to claiming your state pension in later life.

You can opt out of child benefit payments via the Government’s website or the HMRC app, which is free to download.

Martin Lewis’ latest MSE newsletter said: “Many don’t bother registering if one parent/guardian earns over £60,000, as they’d just have to pay it all back.

“Yet that’s often a bad idea. Even if you earn too much to gain from it, it’s worth registering as it triggers your eligibility for national insurance credits.”

The newsletter went on to reveal 200,000 parents are missing out on boosting their NICs because they are claiming child benefit in the wrong name.

Rather than the higher earner claiming, it should be the lower earner who needs the NICs more.

Who is eligible for child benefit?

You normally qualify for child benefit if you live in the UK and you’re responsible for a child under 16.

The support can also be claimed for a child under 20 if they stay in approved education or training.

To be considered responsible for a child, you will live with them or you’re paying at least the same amount as child benefit rates to look after them – for example food, clothes or pocket money.

It’s important to note that eligibility changes if a child goes into hospital or care and if your child starts to live with someone else.

If you’re not sure about your eligibility you can contact the child benefit office.

You don’t get the full amount of child benefit if you earn over £50,000 and get nothing if you earn over £60,000.

That’s because of something called the High Income Child Benefit Charge – but if it applies then it’s still worth claiming.

How much is child benefit worth?

There are two child benefit rates – one for the eldest child and another for each further child or children.

The current rate for your eldest or only child is £24 per week. That’s £96 a month or £1,152 a year.

You can get £15.90 for every additional child.

In April this year, child benefits will rise by 6.7%, based on inflation figures from September 2023.

The new rate for your eldest or only child will be £25.60 per week. That’s £102.40 a month or £1,228.80 a year.

You will be able to get £16.95 for every additional child.

Child benefit payments are likely to rise again April 2025 in line with inflation from September this year.

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This post first appeared on thesun.co.uk