The number of families choosing to opt-out of receiving child benefit payments has almost doubled in the past decade.
Figures from HMRC out today (17 April) revealed 741,000 families opted out in August 2023 representing an increase of 9 percent since August 2022 and an 87 percent rise from 396,000 in August 2013.
The data shows that child benefit take up is at its lowest level since 2003, which is when HMRC began producing these statistics. The figures also highlight that the rise in the high-income thresholds, introduced in the government’s Spring Budget this year, were long overdue.
Charlene Young, pensions and savings expert at AJ Bell, said: “There’s been another increase in the number of families who are claiming child benefit but opting to not 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 decide not to receive the money if they’ve hit the high-income threshold at which it needs to be paid back. This income threshold had been set at £50,000 for the past 10 years but was raised to £60,000 a year in the budget in March 2024.
Parents who opt out of collecting the payment can still accrue national insurance credits towards the state pension and other benefits.
But Young said that 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.
“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 percent per £100 of extra income, disappearing entirely when one partner earned £60,000 or more,” said Young.
“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“Child benefit is now withdrawn at a rate of 1 percent for each £200 of earnings over £60,000, meaning eligibility for child benefit is lost entirely where one partner earns £80,000 or more.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 brought in in tandem with a rise in the weekly benefit payment to £25.60 a week for the eldest child and £16.95 a week for each additional child.
