Who does child benefit money belong to?

Who does child benefit money belong to?

Question

Assalamualykum
I am from the UK and receive child benefit money for my children.
My questions are:
1)Do I consider that money to be my children’s property or my own (I am the father)?
2) Do I have to pay Zakat on that money?
3) Am I allowed to spend that money on anything/anyone else other than my children?
JazakAllah for you time.


Answer

If a person meets set conditions they will be entitled to child benefit. Based on our understanding this is a gift to the guardian of the child and will therefore enter the guardians ownership. Hence, if the money is still present at your zakat anniversary then it will be added to your remaining zakatable assets and zakat will be paid accordingly. Even if you have kept the money separate and only spend it on your children it will still be considered as your money and you will have to pay zakat on it. The only exception would be if you have actively gifted that money over to your child and are holding it for them until they are mature. In such a case as the money now belongs to the child you would not have to pay zakat on it. When the child becomes mature, if their wealth fulfils the conditions of zakat then zakat will have to be paid on their wealth

As for how that money should be spent, as the government guidelines don’t clearly state how the money is to be spent we will look at the historical context of child  benefit to try and understand the purpose behind it.

Child benefit replaced the support provided to children through Family Allowances and Child Tax Allowances. The Family Allowances Act was passed in June 1945. This was a benefit paid to families for each second and subsequent child and had been campaigned for by Eleanor Rathbone.

In her book The Disinherited Family, she has a section discussing whether direct provision should be made for the mother or for the children only. She discusses how the married mother is totally dependent on her husband and ‘her’ hardships would not be met if a provision was made only for the children whereby only their basic necessary needs are met. Rather, the position of the mother also needs to be made secure. “Provisions for the children’s needs should include provision for their mother, since her services are indispensable to them.”

From the discussions in this book we understand that one objective behind such benefits is to secure the status of the mother and make provisions for her as well. Hence, it is not necessary that all such benefits must be directly spent on the children. However, these discussions take place in light of the mother being a key supporter of the child, thus even if provisions are made directly to the mother the child still benefits, be it indirectly.

The 1942 whitepaper on The Family Allowance Scheme outlined and argued the benefits of a family allowance. From amongst the benefits were:

– Lessening the risk of malnutrition in larger families

– Encouraging parenthood to counteract a falling birth rate

– To ensure that families not liable to pay tax received the same allowance.

Again we can see that though the benefit is being paid specifically to the guardian the greater objective is to support families in general.

Child Tax Allowance was another benefit that families had access to and from our understanding this reduced the amount of tax the guardian would have to pay. This was clearly supporting the guardian directly and did not provide any additional sums to be spent on any children. However, this allowance only supported taxpayers (working people) and did not cater for the more needy families. Eventually it was reduced as family allowances increased.

Child Benefit eventually replaced family allowances and child tax allowances. Barbara Castle was responsible for the Child Benefit Bill. During the second reading, in her opening remarks she stated:

“It achieves a long overdue merger between child tax allowances and family allowances into a new universal, non-means tested, tax-free cash benefit for all children, including the first, payable to the mother. In this way it ensures that the nation’s provision for family support is concentrated first and foremost where it is needed most—on the poorest families; and that it goes to the person responsible for caring for the children and managing the budget for their food, clothing and other necessities…”

“… It may be premature to talk of giving the wife and mother her own wage, but she certainly needs control of her own budget if the family is to be fed and clothed. We all know how vitally important the family allowance has been—we have had examples of it brought to our attention in our constituencies—to many a hard-pressed mother, coming, as it does, into her hands in the middle of the week just as her shopping money, probably inadequate in the first place, is ring low…”

“… I presented a petition of over 300,000 signatures to Parliament at that time demanding that any support for children should be in the form not of a tax credit to the father but of a cash allowance payable to the mother through the Post Office. The Select Committee unanimously recommended that this should be done. This Bill is based on that formula.”

These opening statements, again combine between the mother being the recipient of the benefits whilst at the same time stating the purpose, that she had a certain level of responsibility towards the children and these benefits would assist her in this.

The Social Security Select Committee prepared a report on Child Benefit in 1999. In the appendices the objectives of Child Benefit are outlined as follows:

“The objective of Child Benefit is to make a contribution towards the cost of bringing up children. This is an acknowledgement of the fact that, although the decision whether or not to have children is rarely driven by economics, families with dependent children face costs additional to those without. Costs are incurred through:

– the direct cost of providing for the needs of a child; and

– the effect on the return from work—either as a result of the time commitment raising a child requires or through the cost of paying for childcare while the parent works.”

In the main report it states:

“We acknowledge and endorse the ‘multi-purpose’ role of Child Benefit in supporting families and welcome the Government’s commitment to retain it as a universal benefit and as the foundation for the future support of children.”

Based on the above we understand that Child Benefit is a multi-purpose benefit. The over arching purpose is to support families in need and contribute towards the cost of bringing up children. Exactly how that support will take place can vary from household to household. Guardians may choose to spend it directly on the children by purchasing food, clothing etc. They may choose to spend it indirectly such as purchasing certain household necessities which the child too will benefit from. The parent may even just use it to fill any deficit in income due to child care. For example, if a parent has had to take time off work or has had to pay for child care whilst they work they may utilise this benefit to help them.

From a religious standing, benefits such as Child Benefit fall under a gift transaction (hibah). In a gift transaction, complete ownership is transferred over to the recipient without creating any sort of liability on them. They are free to utilise the gift as they see fit. Any conditions that obligate the recipient to utilise the gift in a certain way will be considered void. In the case of Child Benefit this would not be a problem anyway as there is no clear instruction from the Government on how the benefit has to be used.

For this reason, if a person spent the money in a way where the children did not receive any sort of benefit that would not necessarily be a sinful act. However, as the purpose behind the benefit is to support families in general we would advise that the money be used in a way where the family at large will benefit in some way or other. Bear in mind that when you receive the Child Benefit, it will technically become mixed with your wealth. Hence, if at the time of spending on your children you intend for that particular payment to be from the Child Benefit you received, then you will have spent the Child Benefit on your children.

Answered by:
Ifta Research Fellow

Checked & Approved by:
Mufti Abdul Rahman-Mangera
Mufti Zubair Patel

The Disinherited Family 295-296

https://publications.parliament.uk/pa/cm199899/cmselect/cmsocsec/114/144a02.htm

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2560775/pdf/10916922.pdf (Social Insurance and Allied Services – Report by Sir William Beveridge

https://www.parliament.uk/about/living-heritage/transformingsociety/electionsvoting/womenvote/parliamentary-collections/eleanor-rathbone/family-allowances-act-1945/

https://api.parliament.uk/historic-hansard/commons/1975/may/13/child-benefit-bill

http://www.educationengland.org.uk/documents/acts/1975-child-benefit-act.html

https://publications.parliament.uk/pa/cm199899/cmselect/cmsocsec/114/144a02.htm

https://www.legislation.gov.uk/ukpga/1992/4/pdfs/ukpga_19920004_310320_en.pdf

https://www.legislation.gov.uk/ukpga/2005/6/data.xht?view=snippet&wrap=true

https://revenuebenefits.org.uk/child-benefit/policy/where_it_all_started/

https://publications.parliament.uk/pa/cm199899/cmselect/cmsocsec/114/11404.htm#note6

Family Allowances Act 1945

الفتاوى الهندية (4/ 396)
قَالَ أَصْحَابُنَا جَمِيعًا: إذَا وَهَبَ هِبَةً وَشَرَطَ فِيهَا شَرْطًا فَاسِدًا فَالْهِبَةُ جَائِزَةٌ وَالشَّرْطُ بَاطِلٌ كَمَنْ وَهَبَ لِرَجُلٍ أَمَةً فَاشْتَرَطَ عَلَيْهِ أَنْ لَا يَبِيعَهَا أَوْ شَرَطَ عَلَيْهِ أَنْ يَتَّخِذَهَا أُمَّ وَلَدٍ أَوْ أَنْ يَبِيعَهَا مِنْ فُلَانٍ أَوْ يَرُدَّهَا عَلَيْهِ بَعْدَ شَهْرٍ فَالْهِبَةُ جَائِزَةٌ وَهَذِهِ الشُّرُوطُ كُلُّهَا بَاطِلَةٌ، كَذَا فِي السِّرَاجِ الْوَهَّاجِ

وَالْأَصْلُ فِي هَذَا أَنَّ كُلَّ عَقْدٍ مِنْ شَرْطِهِ الْقَبْضُ فَإِنَّ الشَّرْطَ لَا يُفْسِدُهُ كَالْهِبَةِ وَالرَّهْنِ، كَذَا فِي السِّرَاجِ الْوَهَّاجِ

رَجُلٌ وَهَبَ لِآخَرَ أَرْضًا عَلَى أَنَّ مَا يَخْرُجُ مِنْهَا مِنْ زَرْعٍ يُنْفِقُ الْمَوْهُوبُ لَهُ ذَلِكَ عَلَى الْوَاهِبِ، قَالَ أَبُو الْقَاسِمِ الصَّفَّارُ: إنْ كَانَ فِي الْأَرْضِ كَرْمٌ أَوْ أَشْجَارٌ جَازَتْ الْهِبَةُ وَيَبْطُلُ الشَّرْطُ، وَإِنْ كَانَتْ الْأَرْضُ قَرَاحًا فَالْهِبَةُ فَاسِدَةٌ، كَذَا فِي فَتَاوَى قَاضِي خَانْ

وَلَوْ كَانَ الْمَوْهُوبُ كَرْمًا وَشَرَطَ أَنْ يُنْفِقَ عَلَيْهِ مِنْ ثَمَرٍ تَصِحُّ الْهِبَةُ وَيَبْطُلُ الشَّرْطُ، كَذَا فِي مُحِيطِ السَّرَخْسِيِّ

وَفِي الْإِسْبِيجَابِيِّ رَجُلٌ وَهَبَ لِرَجُلٍ هِبَةً أَوْ تَصَدَّقَ عَلَيْهِ بِصَدَقَةٍ عَلَى أَنْ يَرُدَّ عَلَيْهِ ثُلُثَهَا أَوْ رُبْعَهَا أَوْ بَعْضَهَا فَالْهِبَةُ جَائِزَةٌ وَلَا يَرُدُّ عَلَيْهِ وَلَا يُعَوِّضُهُ بِشَيْءٍ، كَذَا فِي التَّتَارْخَانِيَّة