DWP: Parents warned over 'work benefits' that could make them ineligible for child benefit

Young mother looking stressed while managing her financial bills and tax documents, working from home on laptop and her daughter is using digital tablet in the background
-Credit: (Image: Getty)


Child benefit, a significant government aid designed to assist with the costs of raising children, provides parents with over £17,000 during the first 16 years of their child's life if a parent's income is below the current £80,000 cap.

However, it's less known that this cap doesn't solely consider the figure on a parent or guardian's wage slips but also includes the value of certain employment benefits which could tip some households just above the limit.

This is referred to as adjusted net income, which is the metric used by the system to determine eligibility for the benefit. Robert Salter, a partner at Blick Rothenberg, informed This Is Money that various other income sources are included in this calculation for child benefit purposes.

Overtime, bonuses and any taxable benefits provided by an employer, such as private medical insurance, a company car and fuel benefits, are factored into this calculation. Moreover, one's pension income, whether it's private or state pension, also plays a part.

It's crucial to remember that child benefit considers all income streams for one individual, which would encompass any self-employment income outside of their main job or things like rental income and investments, reports Wales Online.

Robert explains that deductions in adjusted gross income can include pension contributions, gift aid subscriptions, cycle to work scheme costs and tax deductible business expenses such as professional subscriptions.

Child benefit has two thresholds. The lower threshold was increased from £50,000 to £60,000 in April, while the upper threshold was extended from £60,000 to £80,000.

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

When a parent's income exceeds £80,000 annually, the Child Benefit is completely withdrawn. This removal is based on one guardian's individual income rather than the household income.

The weekly child benefit payment provides parents with £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.

For breaking news in your area direct to your inbox every day, go here to sign up to our free newsletter