In 2013, the Coalition Government introduced a ‘high income charge’ which means that once a parent’s income hits the £50,000 threshold, they must repay one per cent of the amount they received in benefit for every £100 of income over £50,000. By the time a salary reaches £60,000 the benefit is completely wiped out.
The self-employed are particularly at a disadvantage due to their more volatile income which can see them drop in or out of the threshold unexpectedly.
In a series of reports, the newspapers are shining a light on parents who have been affected by the changes and they are campaigning for a review of the £50,000 cap. In one article they focused on Georgina Edwards, a self-employed photographer. She decided to work for herself in order to have more flexible hours.
Speaking to The Sunday Times, she said: “I’d love the predictability that comes with a regular salary but can’t face going back to the commute.
“A huge number of newish mums realise that going back to the jobs before they had children is difficult to achieve, so an awful lot are going self-employed.”
However, given her variable income, it is difficult for her to predict whether she would be hit with a tax bill for claiming child benefit. The complexity has deterred her from applying altogether. The article suggests she is missing out on up to £1,800 that she could claim for her two children, aged four and eight.
It adds that “many stay-at-home parents who are no longer claiming child benefit because of the income limit are losing out on state pension credits” as well. This is because even if you don’t want to claim child benefit, filling out the form will help you get National Insurance credits, which count towards your State Pension.