In 2010, the Government announced that it would remove child benefit for high income households. In the Government’s view such a household would be one where one of the partners has income of more than £50,000 and this is reflected in the legislation.

Child benefit is currently worth £1,076 per year for the first child and £712 for each subsequent child.

Where income of one of the claimants exceeds £50,000 there is a tax charge equal to 1% of the amount of child benefit for each £100 of income between £50,000 and £60,000. Child benefit is therefore tapered away until, when income hits £60,000, it is lost completely.

This has led to many partners who stay at home and don’t work not bothering to register for child benefit. After all, what is the point of claiming a benefit that has to all be subsequently paid back because the other partner has income of more than £60,000?

For those parents who officially opt out of receiving child benefit but still register, they can still continue to receive a credit towards their State pension entitlement. However, for those who simply do not claim child benefit this may cause them to lose entitlement to part of their State pension.

Such people should, if they are responsible for a child under age 12, still fill in the claim form and tick the opt-out box to make sure they get their National Insurance credits which will count towards their State pension entitlement. These credits are particularly vital for stay-at-home parents who are unlikely to be contributing to any other type of pension.

Clearly this is a bit of a trap for couples where one stays at home and looks after the children and the other is out at work with an income of more than £60,000. The “at-home” parent should still register for child benefit – even though none will be paid.