March 8th 2024.
According to financial expert Martin Lewis, there are about 200,000 parents in the UK who aren't taking advantage of free National Insurance credits. These credits are available for parents who are earning less than £123 a week and are claiming child benefits. They are designed to help maintain their record for the basic state pension, even if they are not making direct contributions due to a low income or not working.
Lewis, who is the founder of MoneySavingExpert.com, had previously highlighted this issue and urged parents to make a simple change that could save them thousands of pounds. He explained that if the higher earner in a couple is the one receiving the child benefit, they can transfer the NI credits to their partner. This means that the partner who is not working or earning a low income can still receive credits towards their state pension.
One family, in particular, saw great benefits from following this advice. David, a man who reached out to MoneySavingExpert.com, shared how this simple change had saved his family around £7,000. His wife, who has a low-paying job, was not making any NI contributions and had a 10-year gap in her state pension record. However, by transferring the child benefit credits to her, she was able to receive 10 years' worth of free NI credits, which would have otherwise cost them a significant amount of money. Lewis also added that this could potentially boost her state pension by around £3,000 per year.
To transfer NI credits to your partner, you can visit the government's website and fill out a form. This can be done entirely online or by filling out the form online and then printing and mailing it. It's important to note that these credits can sometimes be backdated, as was the case with David's family.
In the recent Budget, Chancellor Jeremy Hunt announced that the child benefit threshold will be increasing from £50,000 to £60,000 in April. This means that anyone earning under £50,000 a year will receive the full child benefit allowance. The amount at which the benefit is completely withdrawn has also increased from £60,000 to £80,000. Currently, parents can receive £24 per week for their first or only child, but this will increase to £25.60 in April. For each additional child, they can claim an extra £15.90 per week, which will also increase to £16.95.
Hunt also mentioned that there will be consultations to introduce a new rule where the child benefit will be based on the collective household income rather than an individual's income. This change is expected to be implemented by April 2026. Some critics have pointed out that under the current system, a family with two earners can have a household income of £100,000 and still receive the full benefit, while a single parent earning £60,000 would not receive anything.
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