UK Child Benefit and non-UK resident EU children

European Union 4.18

Summary

1 The UK pays child benefit and child tax credits to almost 50,000 children who live in another EU country. The most common country of residence is Poland, where claims are made for almost 30,000 children. British rates are about four times those in Poland. The cost to the British taxpayer is just over £1 million per week. Only in four other EU countries do the rules allow for such payments to be made to non-resident children.

Introduction

2 This paper will examine recent data released in a Parliamentary Question tabled by Mr Keith Vaz which revealed the number of child benefit claims in respect of children that do not live in the UK but in another EU country.[1] It calculates the costs to the UK taxpayer and examines the rules in other EU countries.

Numbers

3 There are 24,082 child benefit awards in respect of 40,171 children and a further 4,011 child tax credit awards in respect of 6,838 children. The country of residence of the largest number of overseas children in receipt of UK child benefit and child tax credit is Poland, where child benefit is paid for 25,659 children and child tax credit is paid for 3,829 children. This of course reflects the large number of Polish migrants living in the UK. (See Annex A for a breakdown of Child Benefit and Child Tax Credit payments by Country)

Child Benefit Rates

4. In 2011 child benefit was set at £20.30 per week (£81.20 per month) for the first child and £13.40 per week (£53.60 per month) for the second and subsequent children.[2] These rates will remain frozen until 2014.

Benefit paid out to children living overseas

5 Child benefit paid to 40,171 children living overseas costs the taxpayer £36.6 million per year and child tax credit costs £18.6 million per year. Therefore the combined payments amount to over £55 million per year or £1 million per week.

Table 1. Costs of Child Benefit and Child Tax Credit to non-UK resident children.

 Number of childrenAnnual Rate £'sTotal cost Per annum £M
 
CHILD BENEFIT
First child24,0821,05525.4
Second Child16,08969711.2
Total Child Benefit40,17136.6
 
CHILD TAX CREDIT6,8382,72018.6
 
GRAND TOTAL55.2

6 It is noteworthy that only one in six children also receives child tax credit. That is probably because the parents do not earn enough to pay income tax but some may earn more than the threshold for payment.

Benefit Rules across the EU

7 Most countries do not pay child benefit in respect of children living outside of their territory. According to the EU’s Mutual Information System on Social Protection, in order to claim child benefit in Austria, Belgium, Bulgaria, Cyprus, Denmark, Estonia, Finland, France, Hungary, Italy, Lithuania, Luxembourg, Malta, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden the child must be resident in the territory.[3] In Ireland the rules stipulate that the child must be normally living with and being supported by the recipient however in practice this is not the case.[4] Only in the UK, Czech Republic, Germany, Latvia, and the Netherlands can child benefit be claimed for children who live in another EU state.

Child Benefit Entitlement in Poland

8 There is a significant financial benefit to claiming child benefit in the UK over Poland. In Poland, child benefit is paid at a rate of £13.60 per month (68 Polish Zloty) for children aged 4 years and under, £18.20 per month (91 Polish Zloty) for children aged between 5 and 18 years and £19.60 per month (98 Polish Zloty) for children aged 18-24 who remain in education.[5] This is a quarter of the amount paid by the UK government for the first child.

Conclusion

9 Child allowances paid in respect of children who live in another EU country costs the UK taxpayer over £55 million per year, or over £1 million a week. In all other EU countries except the UK, Czech Republic, Germany, Latvia and the Netherlands the child must be resident in that country in order to qualify for child allowances.

1 February, 2013

Notes

  1. Parliamentary Question138991, Mr Keith Vaz, 28 January 2012, Hansard, Column 619W, URL: http://www.publications.parliament.uk/pa/.../text/130128w0004.htm
  2. HMRC, Child Benefit Rates 2011-2014, URL: http://www.hmrc.gov.uk/childbenefit/payments-entitlements/payments/rates.htm
  3. MISSOC, URL: http://ec.europa.eu/social/main.jsp?langId=en&catId=815
  4. Irish Times, ‘Efforts to save money on child benefit going abroad shelved’, 12 October 2012, URL: http://www.irishtimes.com/newspaper/frontpage/2012/1012/1224325188343.html
  5. MISSOC

ANNEX A

Child Benefit Awards and Number of Children to Overseas Children by Country, 2012
CountryNumber of awardsNumber of children
Poland15,49925,659
Ireland1,2812,609
France1,0802,003
Slovakia1,0831,881
Lithuania1,2761,772
Spain7561,275
Latvia8531,117
Germany366641
Netherlands192379
Portugal239364
Italy193330
Romania196328
Czech Republic176282
Belgium138274
Switzerland122238
Bulgaria174238
Hungary132203
Sweden66122
Cyprus5380
Greece5176
Norway1465
Estonia4363
Austria2947
Denmark2035
Finland1630
Malta1421
Luxembourg1021
Slovenia713
Iceland35
Totals24,08240,171

Child Tax Credit Awards and Number of Children to Overseas Children by Country, 2012
CountryNumber of awards Number of children
Poland2,2783,829
Ireland6111,207
Lithuania339484
Slovakia141256
Latvia178243
France95203
Spain79153
Romania4568
Bulgaria5266
Hungary4365
Germany3860
Portugal2240
Czech Republic2538
Netherlands1022
Italy1321
Norway618
Belgium411
Greece511
Sweden310
Estonia99
Cyprus26
Austria34
Switzerland34
Finland23
Luxembourg12
Malta22
Slovenia12
Denmark11
Iceland00
Totals4,0116,838

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