Simple mistake causes 200,000 people not to benefit from increased state pension | Personal Finances | Finance

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To qualify for a full state pension, Britons must have 35 years of eligibility, which requires them to have paid at least 10 years into national insurance. This is not a problem for many people, but those who have taken the time to take time off from their full-time jobs to care for children might not realize it until it is. too late. However, there is an easy way around it.

Applying for family allowances solves this problem for many people, as the allowances automatically provide national insurance credits for the state pension.

However, even if a person loses some or all of the payment through tax, it is considered important to at least register and refuse to receive money – in this way, the credits d National insurance is granted so that this does not affect the state pension.

It is believed that up to 200,000 Britons are missing £ 179.60 per week when they retire because of this simple mistake.

READ MORE: Universal Credit applicants will receive an additional £ 67 each month

Family allowances pay £ 21.15 per week for the oldest or only child and £ 14 for any additional children and, although they were available to all families regardless of income, they are now taxed if someone earns over £ 50,000 a year.

As of 2013, if a person’s income is over £ 50,000, they are taxed at one percent on every £ 100 above the threshold.

Once a parent earns £ 60,000 they lose all tax benefits – so it’s understandable that higher income people choose not to receive them.

However, even if you lose some or all of the payment through tax, it is important to at least sign up and refuse to receive any money – this way, national insurance credits are granted so that it does not affect the state pension.

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Anyone who receives child benefit and earns more than £ 50,000 per year can complete a child benefit registration form, but refuse to receive payments if they wish.

If they don’t opt ​​out or submit a separate self-assessment form to HM Revenues and Custom (HMRC) by October 5, they face a fine.

The £ 50,000 threshold has not changed since 2013, which worries some experts as they fear this will mean more base rate taxpayers will be affected by the high income family allowance (HICBC) tax burdens in the country. over the next few years due to the increase in wages.

Parents should also be aware that they could fall below the £ 50,000 threshold in taking advantage of the allowance.

Certified Financial Planner Kay Ingram explained: “Parents receiving Child Benefit, when a household member has an income above £ 50,099 in the 2020/21 tax year, have to pay a high income family allowance (HICBC).

They must notify HMRC by registering for the self-assessment by October 5. “

However, she added that some things can be deducted from income, which brings people back below the threshold.

Ms Ingram said: “Certain deductions can be made from recognized income, so that the tax burden is reduced or even eliminated.

She continued: “Some parents who have waived their right to family allowances, to avoid the tax burden, may be able to claim again if their income has decreased, or they may make these deductions from their income.

“But deductions from recorded income can be made for UK private pension savings and charitable donations made under the Donation Assistance Program, restoring some or all of the tax-free family allowance.

“Retirement savings can be matched with income in the same year they are created.

“Donations in the form of donations can be deducted in the year they were made or carried over to the previous tax year. “


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