Work benefits that could make parents ineligible for DWP child benefit from insurance to fuel allowance

Parent and child on the couch
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Child benefit, one of the most wide-reaching government benefits aimed to help with the costs of raising children, help parents to the tune of more than £17,000 over the first 16 years of their child’s life if a parent’s income falls below the current £80,000 cap.

However, few know that this cap doesn’t just take into account the number on a parent or guardian’s pay stubs but also includes the value of some work benefits which could pitch some households just over the threshold.

This is called adjusted net income, which is what the system looks at to calculate one’s eligibility for the benefit. Partner at Blick Rothenberg, Robert Salter, advised This Is Money that a range of other income sources are included in this calculation for child benefit purposes.

Overtime, bonuses and any taxable benefits provided by a person’s employer, including private medical insurance, a company car and fuel benefits, are used in this calculation. Additionally, one’s pension income also plays a role whether it is private or state pension.

It’s also important to keep in mind that child benefit takes into account all income streams for one individual which would include any self-employment income outside of their primary work or the likes of rental income and investments.

Things that count as deductions in adjusted gross income, according to Robert, are pension contributions, gift aid subscriptions, cycle to work scheme costs and tax deductible business expenses such as professional subscriptions.

Child benefit technically has two thresholds, the lower of which was raised from £50,000 to £60,000 in April. The upper threshold was previously set at £60,000 but has been extended to £80,000.

Parents or guardians whose total income falls between £60,000 and £80,000 will still receive Child Benefit but may have to pay some of it back due to the high-income child benefit charge.

Once a parent’s income breaches £80,000 annually the Child Benefit will be withdrawn completely, with removal based on just one guardian’s individual income rather than a household income.

The weekly child benefit payment offers parents £25.60 for their first-born or only child and £16.95 for each additional child. The benefit is paid monthly until the child turns 16, or 20 if they are enrolled in approved full-time education or unpaid training according to Money Saving Expert.