Campaign to change child benefit could help freelance parents

A new campaign is calling for a shake-up of child benefit provision in a move that may help freelance parents.

Fairness for Families, a campaign by The Times and The Sunday Times, is recommending changes to the way that child benefit is designed. The newspapers report that amendments to how child benefit is paid in 2013 have left many parents missing out on money they could claim, while leaving others with unexpected tax bills.

Child benefit is available for those who are responsible for bringing up a child who is under 16, or under 20 if they stay in approved education or training.  

A review of current measures is needed

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.

What is it like to be a freelancer and a parent at the same time?

A ‘manifesto for change’

The issue could become a growing problem given the number of self-employed grew past the five million mark earlier this year. Research by IPSE, the Association of Independent Professionals & the Self-Employed, shows that the number of solo self-employed mothers has increased by a total of 54 per cent since 2008.

The newspapers are now calling for a ‘manifesto for change’ in how the benefit is allocated. The recommendations include a review of the £50,000 cap, guarantees that no parent will lose state pension, better publicity on the risks of not claiming, a household income assessment, and a review of how payments are made.

A spokesperson for IPSE said: “We are pleased to see national newspapers bringing attention to some of the challenges in the child benefit system which can particularly affect the self-employed.

“This is simply the latest example of a benefits and support system that does not work for the self-employed. The government needs to urgently review the support it offers to the growing ranks of self-employed people in the UK, from improving the tax system to enabling better access to child benefit and parental rights.”