Local Accountants warn parents of child benefits loophole

Tuesday 2 April 2019

Local chartered certified accountants and tax advisers, Bulley Davey, have warned that parents who don’t register for child benefits may face problems when their children don’t receive their National Insurance number.

A quirk in the child benefits system is already seeing thousands of children fail to receive their national insurance numbers. It is as a result of a High Income Child Benefit Charge introduced in 2013 which is turning parents, who don’t see the need to receive child benefit, off from registering at all.

Without registering for child benefit and then opting out, parents could lose out on national insurance credits towards a state pension while at home with the children – and their children are then not receiving national insurance numbers ahead of their 16th birthday; which allows them to work and apply for student loans.

Olga Carter, Associate at Bulley Davey, spoke about the issue: “This is the kind of unfortunate loophole that we come across in the benefits and tax system and, if you’re not aware of it, it’s easy to get caught out.

“As a parent you have a few options: you can register for child benefit (knowing that some or all of it may need to be repaid), you can register but opt out of actually receiving benefits. Or you can not register for child benefit at all – which is where this problem arises.

“The number of registrations for child benefits has dropped by over 500,000 since 2013 – when the High Income Child Benefit Charge came into force. This means thousands of children and parents may have to prove their identity and apply for a national insurance number manually.

“It’s easy to miss details like these but our advice is always to register – and keep HMRC informed if there are any changes to your circumstances, as this will potentially affect your child benefit. The HMRC website is the best place to stay updated on changes like these.”

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