DWP state pension warning to parents as they could 'unintentionally' lose money
The warning comes from Hargreaves Lansdown as new data from HMRC revealed that 30,000 fewer families are claiming the extra monthly payments
Parents have been issued a warning about opting out of claiming Child Benefit as it could have a major impact on their state pension.
The warning comes from Hargreaves Lansdown as new data from HMRC revealed that 30,000 fewer families are claiming the extra monthly payments. According to the data, as of August 2024, 7.62 million families were claiming Child Benefit, which is 30,000 less than the year before in August 2023.
The data revealed that 712,000 families chose to opt out of receiving payments. According to Hargreaves Lansdown, this is a decrease of 4% from the previous year and could be due to the raised High Income Child Benefit Charge (HICBC) thresholds.
Since the introduction of the charge in 2013, the number of families claiming child benefit has been steadily decreasing. Under Child Benefit rules, you pay money back to HMRC at a rate of 1% for every £200 you earn over £60,000.
If you earn over £80,000 and you'll need to pay back 100% of it - meaning you don't get anything. To pay back the benefit, you currently need to submit a self-assessment tax return. However, this is set to change this summer.
If you don't want to pay the charge, you can opt out of Child Benefit payments by contacting the tax office. However, Hargreaves Lansdown has warned that this could mean parents miss out on National Insurance credits that go towards their State Pension.
Helen Morrissey, head of retirement analysis, Hargreaves Lansdown: said: 'It's an undeniable fact that fewer families have claimed Child Benefit since the charge was introduced back in 2013. Faced with the prospect of having to effectively repay a portion, or even all of the benefit, it's no wonder many parents decided not to bother claiming at all.
"However, the law of unintended consequences loomed large here, as many didn't realise that by opting out, they were missing out on vital National Insurance credits that could be used towards their state pension."
Under the current state pension rules, you need 35 qualifying years on your National Insurance record - some people may need more - to claim the full new state pension. You normally need 10 years to receive anything at all.
Join Money Saving Club's specialist topics
For all you savvy savers and bargain hunters out there, there's a golden opportunity to stretch your pounds further. The Money Saving Club newsletter, a favourite among thousands who thrive on catching the best deals, is stepping up its game.
Simply follow the link and select one or more of the following topics to get all the latest deals and advice on: Travel; Property; Pets, family and home; Personal finance; Shopping and discounts; Utilities.
You build up your National Insurance record through working; however, if you are not working, or not earning enough to pay National Insurance, you can claim National Insurance Credits, which help plug those years.
If you claim Child Benefit, you receive National Insurance Credits if you are not working or earning less than £123 a week. If you opt out of Child Benefit, and are not working for periods of time, then you will not receive these automatic top-ups. This could leave you unknowingly reducing your National Insurance record for the state pension - meaning you could lower your state pension payments.
Helen added: "Government did act, and parents were then able to sign up for the benefit and receive the National Insurance credit without actually receiving the money. The latest data shows over 700,000 families opted to do this and it is hugely positive that awareness of this option is growing.
"The thresholds for HICBC have also been raised which means that fewer families will have a liability. However, it's vital that awareness continues to be raised of the importance of claiming Child Benefit for the sake of your state pension.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Glasgow Times
42 minutes ago
- Glasgow Times
HMRC gives out £632m Tax-Free Childcare to families
Nearly 826,000 working families saved up to £2,000 per child with Tax-Free Childcare in the 2024 to 2025 tax year. The money helps families pay for their childcare, as part of the government's Plan for Change to put more money in people's pockets. HM Revenue and Customs (HMRC) is encouraging those yet to sign up for Tax-Free Childcare, to do it now and give their summer plans a financial boost. Latest figures from HMRC show in March 2025, 54,020 families in London used the scheme to save on their annual childcare bills, an increase of 8,100 families compared to the previous March. Parents! 👪 Could you be missing out on up to £2,000 a year to help with childcare costs? Find out what you're entitled to here. 👇 — HM Revenue & Customs (@HMRCgovuk) May 23, 2025 Working families who sign up to Tax-Free Childcare can boost their annual budget by up to £2,000 per child up to the age of 11 or up to £4,000 up to the age of 16 for a disabled child. Parents can use the scheme to help towards the cost of approved childcare whether that's nursery for younger children, or for older children – wraparound or after school care clubs during term time or holiday clubs for the long summer holidays ahead. Myrtle Lloyd, HMRC's director general for customer services, says: 'Summer can be an expensive time if you have children. Whatever you're planning, Tax-Free Childcare can give your plans a welcome financial boost. Go to to start saving today.' How does tax-free childcare work? For every £8 deposited in a Tax-Free Childcare account, the government tops it by £2, which means parents can receive up to £500 (or £1,000 if their child is disabled) every three months towards paying for their childcare costs. Once families have opened a Tax-Free Childcare account, they can deposit money and use it straight away or keep it in the account to use it whenever it's needed. Any unused money in the account can be withdrawn at any time. Martin Lewis discussed it on his podcast last month, where he said: "Tax free childcare is where you can put money into an account held at and for every 80p you put in the state adds 20p on top, up to a maximum free money of £500 pounds coming from the state per quarter - with double for disabilities. And this is tax free childcare for children under the age of 11." Recommended reading Families could be eligible for Tax-Free Childcare if they: Have a child or children aged 11 or under. They stop being eligible on 1 September after their 11th birthday. If their child has a disability, they receive up to £4,000 a year until 1 September after their 16th birthday The parent and their partner (if they have one) earn, or expect to earn, at least the National Minimum Wage or Living Wage for 16 hours a week, on average Each earn no more than £100,000 per annum Do not receive Universal Credit or childcare vouchers Visit to check eligibility and register for Tax-Free Childcare. Tax-Free Childcare can be used alongside the free childcare hours subject to eligibility.
The Herald Scotland
an hour ago
- The Herald Scotland
How Scotland Excel strives for excellence in prudent procurement
It aims to help local councils source whatever they need to deliver high-quality services within their communities, and it focuses on delivering a range of benefits through its procurement services and carefully designed contracts. These benefits include community benefits, climate mitigation and supply chain risk mitigation. Carr explains that councils face a variety of supply chain risks. These can include local issues with potential suppliers' non-compliance with environmental policies to geopolitical instability with, for example, the war in Ukraine. Simply trying to ensure that, given current budgetary constraints, councils maximise the value they get for every pound they spend, is a challenge in its own right. One of the biggest problems faced by councils today concerns dealing with both escalating labour costs and the difficulty of finding appropriately skilled staff in the first place. 'Our portfolio of contracts stretches from the provision of school meals and school materials to new-build housing and the care sector,' Carr says. 'About two-thirds of the value of what we do is service-related, and the rest is goods-related. With council service contracts, labour costs are a huge consideration. The social care sector for example amounts to around 45 percent of all the procurement activity Scotland Excel manages. And within social care, staffing costs amount to 75% of the total contract costs. So, this is a huge area for us.' (Image: Scotland Excel's Head of Strategic Procurement Hugh Carr) Carr points out that there are a whole host of challenges associated with staffing costs, and Scotland Excel works hard to mitigate these challenges and provide solutions. Brexit, he points out, greatly exacerbated staffing problems in Scotland's care sector. A lot of European nationals returned home and that created all kinds of pressure in filling vacancies. More recently, the increases in National Insurance contribution costs have exacerbated the problem. Trying to contain staffing costs while facilitating value-for-money procurement has become a significant challenge. Similarly, in the construction sector, labour costs can easily amount to 50% of the budget, with councils facing the risk of cost overruns. 'What we look to do here at Scotland Excel is to give councils certainty as to the costs they are going to incur, allowing them to plan the staffing levels that they are going to need to fulfil the services they deliver,' Carr explains. Because Scotland Excel works across 32 local authorities, its team of procurement specialists have a very good idea of what the labour component is likely to be on any particular council service offering. 'In this way, we can enhance and sharpen a council's understanding of labour demands in any area. 'Our market research can give a good degree of certainty as to what the labour costs are likely to be in that service area, be it health care or construction. Obviously, with the difficulties in today's post-Brexit labour market, it is important to drive cost controls and diminish the risks of budget overruns,' he comments. Also, by focusing on market indices, Carr's team can adjust its analysis of past labour trends to show what is likely to happen going forward. There is never 100% certainty, he points out. As always, when using historical data to predict future trends, there is a risk that unexpected events, be they driven by market events or geo-political risks, will impact predictability. But this approach goes a long way to de-risking estimates of labour costs. 'If we can support councils by predicting what is likely to happen, they can adjust their buying patterns to fit with what the market is likely to be doing,' he says. Managing inflation risk is another case in point. 'Two years ago, inflation was at its peak, with food inflation running at 17%. This is very disruptive for councils who have to cater for around one and a half million school meals every week. With predictive analysis, we can show which foodstuffs are likely to increase the most in any period. Pre-planning food purchases and adjusting school meal recipes accordingly can have a very significant impact,' he notes. Right now, food price increases are running at around 4% and are increasing, so this is an area that Scotland Excel is watching closely. Inflation has also played havoc with the construction sector. 'Materials supply is much more stable now than it was two years ago. However, this is a sector that can be rapidly impacted by events,' he notes. If anything leads to a widespread delay in building projects being started, it means that the builders' merchants sit with a lot of stock on their shelves. Building materials manufacturers in turn cut back on their production and prices start to move about. Carr points out that this is one of a number of areas where AI tools are likely to be able to add considerable clarity in the near term. 'We are not quite there yet, but AI is known to be very good at taking a whole host of factors into account when doing predictive analysis. It can really improve on human modelling, so we are monitoring developments in this area.' He says Scotland Excel helps councils to understand the likely impact demographic changes in their areas will have on demand across a range of services. This is particularly impactful in the care sector and in council efforts to generate a sustainable care programme across all areas of the country, including the less densely populated regions.
Daily Mail
an hour ago
- Daily Mail
HMRC ramps up special investigations into the wealthy with AI and helps it claw back £1.5bn in tax in ONE YEAR
An increase in investigations into wealthy people's finances by HM Revenue & Customs yielded £1.5billion in extra tax receipts in one 12-month period, a law firm analysis claims. HMRC more than doubled the amount of tax it raked in via special investigations in the financial year ending 5 April 2024. In the previous tax year, it raised £713million via probes. In a bid to root out hidden income stashes and resolve unpaid tax bills, HMRC is increasingly turning to artificial intelligence and overseas tax authorities, according to experts at law firm Pinsent Masons. The tax authority is utilising a system called the 'Connect Computer System' to assist with its tax collection. The CCS, a computer software system, cross-references business' and people's tax records with other databases to establish fraudulent or undisclosed activities. When hunting for overseas income or assets, HMRC uses initiatives like the Common Reporting Standard and Global Forum, which ensures it is automatically notified when British taxpayers move assets to jurisdictions party to the agreements. In Britain, HMRC deploys its wealthy and mid-sized business compliance directorate team to weed out hidden wealth stashes and get unpaid tax paid. Pinsent Masons told This is Money that HMRC now 'regularly' receives information from overseas, including tax havens, on wealthy Britons. This information is then cross-checked with self-assessment returns data. The specialist HMRC team defines wealthy individuals as people with annual incomes of £200,000 or more in any of the last three years, or those with assets above £2million in any of the last three years. According to Pinsent Masons, the total amount of money collected by HMRC in tax from wealthy taxpayers rose to £5.2billion in the tax year ending 5 April 2024, up from £4billion in the previous tax year. An HMRC spokesman told This is Money: 'It's our duty to ensure everyone pays the right tax under the law, regardless of wealth or status. 'The Government is delivering the most ambitious ever package to close the tax gap and bring in an extra £7.5billion for public services per year by 2029-30.' In recent years, HMRC has been doubling down on its mission to root out concealed income and chase down unpaid tax more proactively. HMRC defines the 'tax gap' as the difference between the amount of tax that should, in theory, be paid to HMRC, and the amount that is actually paid. In the tax year ending 5 April 2023, the tax gap among wealthy people in Britain was estimated to be around £1.9billion. To close the tax gap further, HMRC will be upping its efforts again this year to ensure tax coffers are maximised. During the Spring Statement in March, Rachel Reeves announced that HMRC would get a cash injection of nearly £180million to help close the tax gap. The Spring Statement included £100million in new funding to recruit hundreds more compliance officers and experts tackling wealthy people, plus £79million to spend on third-party debt collectors over the next five years. The measures will enable the tax authority to chip away at unpaid tax liabilities that stood at more than £44billion at the end of December 2024. According to documents published alongside the Spring Statement, about £20billion worth of unpaid tax liabilities are more than 12 months old. The new HMRC hires are expected to net the Treasury £95million in 2029-30, accounting for the costs of hiring and training new recruits. Rachel Reeves unveiled £40billion worth of tax hikes in last autumn's Budget. Ian Robotham, legal director in tax disputes and investigations at Pinsent Masons, said: 'HMRC have been set some very hard targets for extra tax collection by the Chancellor. 'It is hard to see how they can achieve those targets without a sharp rise into tax investigations into the wealthy.' He added: 'The scale of specialist investigations into wealthy taxpayers shows HMRC has already been clamping down much harder on those suspected of underpaying tax. 'Wealthy taxpayers who know they have tax issues to settle should urgently seek professional advice. 'Penalties in respect of inaccuracies can be mitigated down where taxpayers are proactive in contacting them to tell them about and assist them in resolving inaccuracies.'
