Child benefit help. Who’s in the know? Tax man doom!

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  • Child benefit help. Who’s in the know? Tax man doom!
  • wrightyson
    Member

    We recently did this I know but I’m just after some clarification.

    I believe it wasn’t a universal payment after 2013, if you earnt over 50k it was reduced if over 60k you got nothing.

    There is talk of doing a tax return if earning over 50k, why is this necessary if you are paye? Is it purely to fess up to your Mrs receiving child benefit?

    If you’ve been earning that for the last 4 years and never really thought anything of it are you going to get dry humped prison stylee by the taxman.

    Would it have been coded in yo your tax code without realising (vain hope).

    chowsh
    Member

    I earn over the threshold but my wife is part time so doesn’t, she was receiving the payments for a year before we called and stopped them, I had to pay it all back. HMRC will allow you to get the payments and pay back, bit of an interest free loan. It is one of these things where it is individual earnings, not joint, so if you both earn £50k you can receive the full amount but if one earns £60k and the other £0 then you receive none of it.

    poly
    Member

    There is talk of doing a tax return if earning over 50k, why is this necessary if you are paye? Is it purely to fess up to your Mrs receiving child benefit?

    Yip – you have two choices do a SA or ask them to stop paying the benefit

    If you’ve been earning that for the last 4 years and never really thought anything of it are you going to get dry humped prison stylee by the taxman.

    Absolutely, he will be looking for the amount you have not paid, plus penalties, plus interest.  The penalties are slightly better if you volunteer the problem than them discovering it.  You can argue the toss but unless you are prepared to take it to court HMRC won’t back down or ever admit that any part of the system is either stupid, not working properly or that they are at fault.  There is some case law that they will (mis)quote and which may make the argument at tribunal harder anyway.

    Would it have been coded in yo your tax code without realising (vain hope).

    No the only way they know is if you have done a SA.

    Premier Icon senor j
    Subscriber

    A friend of mine ” ahem” ,recently found out the law changed in 2012 and if you earn over £50k and claim child benefit  , you have to fill out a tax return.

    Lots of long term PAYE folk have been caught out and are currently paying back the fines and interest! My friend was recently advised by a HMRC bod to appeal the decision on the grounds of lack of awareness of the change in law.

    To complete the return a P60 is required and the amount of child benefit received…which could be argued ,is all information the HMRC have already got.

    Give them a call – far easier than the bloody government gateway…..which makes this place look like Microsoft homepage.

    Premier Icon Drac
    Subscriber

    HMRC will allow you to get the payments and pay back, bit of an interest free loan.

    They told me to do one and had to pay it back in one, I also don’t earn £50k but they say I still owed it.

    No it’s not coded into your tax code, such a thing would be too common sense for HMRC. However it was fairly widely publicised at the time.

    Premier Icon robbo1234biking
    Subscriber

    Just got my P60 and this is the first time I have earnt over £50k (only just over at £51k). I need to check pension deductions but according to the calculator (which may take it back under £50k) if that is the post-pension deductions figure then I need to pay £118. P60 is at home so cant confirm this until tonight.

    So if it is over £50k after pension deductions then I need to complete a tax return this year for the 2018/2018 tax year?

    Thanks

    DT78
    Member

    stupid and confusing rules.

    you pay back if you earn over 50k after certain pre tax deductions, like pension and c2w.

    unless you have a separate pension to your employer just use the figure on your p60 as it should be right…..at least that what I have been doing so fingers crossed I’m right…

    Premier Icon acsevens
    Subscriber

    I think the advantage of doing SA and still receiving the child benefit is that it allows your partner to continue to build NI credits.

    SA is pretty easy once you’ve done your first one. If you don’t have any other stuff to put in the assessment it’s literally a 5 minute job to put in your p60 figures and the benefit received.

    As above it was fairly well publicised at the time. Worth arguing with HMRC on some things, but probably not this!

    DT78
    Member

    oh yea income from other sources needs to be included too, I think there is a £1k savings allowance which for us is plenty.  Things like profit from renting etc…needs to be on SA

    bensales
    Member

    acsevens

    I think the advantage of doing SA and still receiving the child benefit is that it allows your partner to continue to build NI credits.

    There is an option with HMRC where you can declare you don’t want the child benefit, but your non-working spouse still wants the NI credits.  Thus avoiding the need to do an SA.  This is what we do, as my wife doesn’t work, and I’m above the threshold for getting anything.

    winston
    Member

    If you earn just above the threshold it may well be worth adding more into your pension via salary sacrifice (or child tax vouchers if you are in a scheme already)

    wrightyson
    Member

    It really is shit that a joint income couple can drag in £99998 a year and claim it all but a couple who earn say £65000 get nothing! What kind of shit maths is that!

    Premier Icon martinhutch
    Subscriber

    I’m afraid HMRC are taking great delight in dry-humping people for this. We were aware of the change in the Tax Credit system, because they withdrew the payment…but the child benefit stuff passed us by. As above, prepare for the taxman to lick his lips and ask for the money back, plus interest, plus fine.

    However it was fairly widely publicised at the time.

    Certainly didn’t reach us suckers, who naively thought that if we weren’t entitled to a benefit, the government would simply stop paying it to us…I’m surprised they didn’t, as a minimum, write to all recipients of CB to warn them of the changes.

    So fess up, and get ready to do at least one full SA return, presumably for 2017/18 in your case.

    Premier Icon jam bo
    Subscriber

    its like 2013 all over again.

    blame osborne, was his shit idea.

    gonefishin
    Member

    It really is shit that a joint income couple can drag in £99998 a year and claim it all but a couple who earn say £65000 get nothing! What kind of shit maths is that!

    Exactly the same maths that says a couple with a combined income of £99998 will pay less tax than a single person earning the same.  This sort of “inequity” is riddled throughout the tax system so you’re hardly being singled out.

    As has been said, self assessment really isn’t that difficult and there are plenty of other reasons why as a higher rate tax payer that you should want to complete one.

    e.g. getting the correct tax relief on pensions, gift aid etc.

    mrjmt
    Member

    Urgh, just checked my P60. And now registered for SA.

    Echo the comments above about a single wage being over the threshold. Its proper crap.

    wrightyson
    Member

    I’ve just rang “the man” and fessed up. Do SA now and I have got till 31st Jan to pay up the full amount.

    Really helpful person who I spoke to to be fair. However I had a chat off the record and she said if I knew of anyone in the same boat it was worth telling them to call them, before they call you. Their stance at the minute is one of reasonable leniency, as they are aware there are many people on paye and over the threshold who have no clue, they are also not intent on dumping 8k immediate demands on people and are trying to be “helpful” with repayment plans.

    They have set up a “new team” to deal with this problem and are looking in to all earners over 50k then subsequently sending out the letters of doom!

    There must be others just on here who have no idea either.

    Premier Icon pyranha
    Subscriber

    Remember to include any charitable donations where you signed up to Gift Aid as you’re due a rebate on those (Gift Aid means the charity gets Basic Rate tax added to your donation, but you can claim the difference between Basic and your marginal rate on your self assessment form).  Of course, you did keep those records for a year when you didn’t expect to need them.  If you’re marginally over the £50k threshold, that could tip you back to no additional tax.  Oh, and don’t forget your p11d, if you have any non-payroll stuff (car, health care etc) – here we have to wait until July for that.

    Gotta say that I can’t believe people who say they were unaware of the change. It’s been all over everywhere for years. How can you be bright/hardworking/productive/organised enough to be pulling in Fifty something thousand pounds a year whilst raising a family and not know that this is a thing?

    footflaps
    Member

    So if it is over £50k after pension deductions then I need to complete a tax return this year for the 2018/2018 tax year?

    Probably depends on how your pension is deduced. We use salary sacrifice at work, which means it comes off the gross and the tax man never sees it, nor does it appear on pay slips or P60s. So you can earn £90k, pay £40k into a pension and only earn £50k as far as HMRC is concerned. If the pension deductions appear on your pay slip, then it will appear on your P60, so be counted as part of your salary.

    Premier Icon richmars
    Subscriber

    It’s not being unaware of the change. In my case a few pay increases and  bonus was enough. OK so I should have remembered but I’m not the only one to forget.I had to repay it,do a SA for last year. We don’t get CB any more so I asked to go back to PAYE, which has been agreed.

    Premier Icon windydave13
    Subscriber

    I’m just about to register for all this for the first time as the little man arrived 3 weeks ago. The bit that no-one seems to be able to tell me is whether i need to declare the bonus i have earnt each year? Its not guaranteed so do i need to declare it, or is it all based off your P60?

    Premier Icon Drac
    Subscriber

    I was aware of the changes what I was not aware of is the PAYE does not cover this.

    Premier Icon v8ninety
    Subscriber

    Is it just married couples? What about cohabitees? My other half gets CB (which she puts into a child ISA for her daughter) I don’t claim it for my boys, because their mother gets it as the resident parent. If I crept over £50k, would it effect either CB claim?

    stevextc
    Member

    I’ve just rang “the man” and fessed up. Do SA now and I have got till 31st Jan to pay up the full amount.

    Really helpful person who I spoke to to be fair. However I had a chat off the record and she said if I knew of anyone in the same boat it was worth telling them to call them, before they call you. Their stance at the minute is one of reasonable leniency, as they are aware there are many people on paye and over the threshold who have no clue, they are also not intent on dumping 8k immediate demands on people and are trying to be “helpful” with repayment plans.

    They have set up a “new team” to deal with this problem and are looking in to all earners over 50k then subsequently sending out the letters of doom!

    There must be others just on here who have no idea either.

    Yeah, despite what some call ‘widely publicised at the time’ if you are PAYE then widely publicised is a bit like saying that there will be a bad storm in Manila this week or the hunting season for turkey’s in Connecticut is going to be delayed a week this year.  You don’t live in Manila or hunt turkey in Connecticut … or presumably know the intricacies of hunting them or that this might have any impact on your life or require attention.  Probably most importantly you might not realise that hunting turkey is compulsory for all people in the state on the opening of the season including visitors and you were going to be landing there that very day to get a domestic flight somewhere they don’t hunt turkeys… (I don’t think it is.. its just an example)… Moreover I think the whole idea of self-assessement for those who have never done it is or can be as scary as being told your going to be handed a loaded shotgun…

    The HMRC seem to get this… at least the nice chap I spoke to.

    Premier Icon jam bo
    Subscriber

    I’m just about to register for all this for the first time as the little man arrived 3 weeks ago. The bit that no-one seems to be able to tell me is whether i need to declare the bonus i have earnt each year? Its not guaranteed so do i need to declare it, or is it all based off your P60?

    your bonus is earnt income. so yes. it’ll be based off your P60 so done in retrospect.

    It really is shit that a joint income couple can drag in £99998 a year and claim it all but a couple who earn say £65000 get nothing! What kind of shit maths is that!

    Echo the comments above about a single wage being over the threshold. Its proper crap.

    Why is it so often the people with the most that are moaning and grabbing to get even more?

    Surely the correct response in this case is to be happy and pleased that you’re earning stacks of money and no longer need a government hand out that poorer people may rely on.

    But no, they’re whining about the  fact that there’s people earning even more money than them in an even more priveliged position.

    Really …

    Premier Icon bruneep
    Subscriber

    looking in to all earners over 50k then subsequently sending out the letters of doom!

    won’t affect me then being poorly paid PS worker.

    😁

    Premier Icon jam bo
    Subscriber

    Why is it so often the people with the most that are moaning and grabbing to get even more?

    Surely the correct response in this case is to be happy and pleased that you’re earning stacks of money and no longer need a government hand out that poorer people may rely on.

    But no, they’re whining about the  fact that there’s people earning even more money than them in an even more priveliged position.

    Really …

    House A:

    one person in a household works full time and earns 60k. They lose all child benefits.

    House B:

    both work part time, one earns 40k and the other 20k. They keep all child benefits.

    its a poorly thought out and poorly implemented system. as shown by the fact that a number of people are getting caught out nearly five years after it was implemented.

    poly
    Member

    Gotta say that I can’t believe people who say they were unaware of the change. It’s been all over everywhere for years. How can you be bright/hardworking/productive/organised enough to be pulling in Fifty something thousand pounds a year whilst raising a family and not know that this is a thing?

    Because:

    1. The media coverage (which was directly quoting the chancellor) said “child benefit would be withdrawn to those earning over the threshold” not “we will introduce a new tax for those earning over the limit and receiving CB.

    2. HMRC helpfully wrote to lots of, but not all affected people warning them in advance.

    3. If your only dealing with HMRC is as a PAYE employee and standard simple tax affairs then you probably have no reason to go looking for reasons to do a SA.

    4. Not sure where you consider “all over everywhere” to be – but I’ve certainly not seen anything – perhaps they focussed the alleged advertising campaign on the SE where everyone is rolling in it.

    5. If you were earning < 50k (especially if it was a lot less) when the rules changed they didn’t apply to you and you’d have no reason to make further enquiries.

    6. If you don’t directly receive the benefit (the legislation makes the highest earner not the recipient liable) then you may well not have realised that they had not withdrawn the benefit as implied (and in some cases the partner may not know the higher earner is above the threshold).

    7. HMRC didn’t write to people or expect employers to alert people when their earnings changed to >50k.

    wrightyson
    Member

    Our accountant is going to do my SA for me and try and squeeze a bit back.

    As regards bonus it doesn’t matter, it’s still earnings and is basically what took me over. We are still going to claim it firstly because my bonus is not guaranteed and secondly because it goes towards my wife’s national insurance contributions and therefore could affect her future pensions if we cancel it.

    As for thegeneralist’s “awesomeness” comments I’m just a thick builder who genuinely thought the paye bit that’s mentioned on my wage slip eveey month took off me what i owed!!

    Is it just married couples

    Nope.cohabitees affected too. So your income will preclude your current woman from getting it

    poly
    Member

    the generalist:

    Nope.cohabitees affected too. So your income will preclude your current woman from getting it

    No it won’t – it will mean if she (the partner he lives with) continues to claim (i.e. does nothing) HE will become liable for a tax charge (assuming he is the higher earner).

    Jam no

    House A:

    one person in a household works full time and earns 60k. ….

    House B:

    both work part time, one earns 40k and the other 20k. They keep all child benefits.

    its a poorly thought out and poorly implemented system

    Yes it’s poorly thought out, but my point still stands that why are these people on 60 grand a year moaning about how bad they have it when in fact they are doing pretty well.

    I reply to poly. Yes I guess you’re correct. I should have written “should preclude rather than “will preclude ie you would take steps to stop her claiming.

    gonefishin
    Member

    House A:

    one person in a household works full time and earns 60k. ….

    House B:

    both work part time, one earns 40k and the other 20k.

    Never mind the child benefit Household B is taking home about 5k a year more than Household A.

    I remember these arguments about how “unfair” it was way back when it was first introduced.  As far as I can tell the only way to make it “fair” for everyone is to either pay it to everyone regardless of income or pay it to no one.

    The tax system isn’t “fair” as to do so would be impossible.  Get over it.

    I’m just a thick builder who genuinely thought the paye bit that’s mentioned on my wage slip eveey month took off me what i owed!!

    I would advise everyone to never assume that that is the case.  HMRC rely on people telling them what they need to know including when circumstances change and for your PAYE to deduct the correct amount the correct code needs to be applied and it is your responsibility not HMRCs or your employers to make sure that that is correct.

    mike_p
    Member

    No it’s not coded into your tax code

    Oh yes it is, if you complete SA each year before the end of Dec.

    Premier Icon FB-ATB
    Subscriber

    The generalist- just because someone earns a salary >£50k doesn’t mean they are tax experts.  I’ve worked at a private air charter company where maintenance staff and pilots earned well in excess of that.  They may have been good at mending Learjets and flying them but didn’t have a clue about tax.

    As the bulk of taxpayers are PAYE, HMRC get P60s and P11ds so know what we earn.

    When it suits them they can be joined up with different sets of data.

    For example a mate works for a construction company who pay their subbies under CIS. When they pay subbies, CIS tax is deducted. HMRC ran a check on all the subbies their company paid and then looked at who paid these subbies.  There were a few cases where 100% of a subbies income was with the one company. Thus HMRC questioned if they should be employees or not.

    If they can put 2 & 2 together here, it would have been logical for them to send letters or SA forms for anyone who’s P60 was over £50k.

    Agree with gonefishing

    Premier Icon martinhutch
    Subscriber

    Exactly. In retrospect it’s a naive assumption to make, as it relies on competence by either the government or HMRC, but to set up a system like PAYE and then randomly rip it up and force people into self-assessment to claw back money that should never have been handed over in the first place is just bizarre.

    We can put up with CB being means tested, but they need to do that at source using the same method they used to stop paying me Child Tax Credit, which seemed efficient enough at the time. When salary rose above a certain level, they just stopped giving us the money. Crazy idea…

    And as for the sliding scale of losing the cash between 50K and 60K, FFS just decide on a cut-off, and stick to it, rather than adding another layer of complexity.

    There may have been a bit of publicity at the time, but the salary was not above the threshold at that time, and no additional communication was forthcoming when it did rise above 50K a couple of tax years later.

    More cynically-minded people might think that HMRC are more interested in the fines. Wonder if there is a nice target for this additional source of revenue?

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