Little-known loophole that could see you lose child benefit - and how to avoid it

PARENTS could be at risk of losing their child benefit because of a little-known loophole.

If you or your partner earn over £50,000 you have to start paying some of the benefit back through the "high income child benefit charge".

But what families might not know is that interest earned from savings accounts forms part of that income.

And with rates rising, savers will be edging closer to that threshold and could therefore have their child benefits cut.

Most people get something called the personal savings allowance, which lets you earn a chunk of interest before paying tax.

Basic rate taxpayers get £1,000 and higher rate taxpayers get £500.

What is the high income child benefit charge?

If either parent or carer starts earning over £50,000, they have to start paying the high income child benefit charge.

This means you have to pay back 1% of your child benefit for every £100 of income earned over the £50,000 threshold.

Once you reach £60,000 of yearly income you have to repay the full amount of child benefit received.

Parents have been caught out by the complicated rules and extra charge and landed with bills for thousands of pounds.

It's up to parents to notify HMRC if they are liable for the charge and they must file a self-assessment tax return to pay it.

Child benefit is paid to parents to help with the costs of childcare.

Payments are usually made to you from the government every four weeks.

By claiming child benefit you also get National Insurance credits that count towards your state pension.

There are two different rates for child benefit.

Currently, parents can claim £24 per week for their first or only child – £96 a month and £1,248 a year.

For any additional children they can claim an extra £15.90 a week per child – £63.60 a month and £826.80 a year.

You normally qualify for child benefit if you live in the UK and are responsible for a child under 16.

But you can also claim the support for a child under 20 if they are in approved education or training.

When two or more people share the responsibility of caring for a child, it can only be claimed by one person.

You'll be responsible for a child if you live with them or you are paying at least the same amount as child benefit towards looking after them.

This might mean you are paying the equivalent amount of child benefit on food, clothes or pocket money.

You should bear in mind, eligibility changes if a child goes into hospital or care and if your child starts to live with someone else.

Usually, you get child benefit for eight weeks after your child goes to live with a friend or relative – as long as they don't make a claim.

But it can continue for longer if you make contributions to your child's upkeep.

Foster parents can also claim child benefit, as long as the council is not paying anything towards their accommodation or maintenance.

Legal guardians or parents adopting a child can also apply for the benefit, but the child has to be living with them.