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

Home Forum Chat Forum 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!
  • Premier Icon FB-ATB
    Subscriber

    They recently had a red diesel court case thrown out due to HMRC incompetence so must be looking elsewhere to recover. How much CB will they claw back compared to Starbuck’s and Vodafone’s special tax deals?

    Premier Icon v8ninety
    Subscriber

    I have no beef with the principle of reduced/no CB for high earners. But the system is definitely shite, as documented by the numerous examples above. It’s either a deliberate trap to garner extra income from fines, or more likely a badly thought out and implemented political headline policy. Hard to understand quite why they made it so obtuse though.

    Premier Icon v8ninety
    Subscriber

    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).

    Understood. Just out of academic interest, what would the case be if two adults were living together as friends, or in a landlord-lodger situation? Or two women sharing living costs? How about a loveless but basically amicable couple that stay together out of inertia and for the kids sake, but both see other people? Seems like a massively grey area to me. What defines whether one individuals situation has an impact on the others tax liability? Seems a bit shit to me.

    bensales
    Member

    <div class=”bbp-reply-author”>

    <div class=”bbp-author-role”>thegeneralist</div>

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    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.

    </div>
    Most people, including myself, aren’t moaning that we should have the money.  As you rightly point out, people with incomes over 60k shouldn’t need it.

    We’re moaning that it’s unfair that others with the same or greater household income are still eligible for it.  To make it fair, it should have been based on household income, and where the household income is greater than 50k it gets tapered off, to zero at 60k.

    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

    But then people would be getting minor pay rises and losing money. Actually, not so minor

    Premier Icon martinhutch
    Subscriber

    But then people would be getting minor pay rises and losing money. Actually, not so minor

    Only a little bit.

    To quote a wise sage from earlier in the thread, 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.

    😉

    wrightyson
    Member

    According to our accountant HMRC will be well within their rights to hit people for “100% benefit penalty” in lamens that means paying back double what you shouldn’t have received.

    The lady at HMRC I spoke to today confirmed this but hinted it wouldn’t be the case if people were honest and open. As I say she also mentioned “a team” had been set up to look at all 50k plus earners with children. I’ve a funny feeling that “team” will easily cover their wages!

    As for thegeneralists on going comments about people who earn too much, I don’t think I have it hard, I do work hard though, I just feel it’s poorly thought out. I wonder if the couple on a joint 90k income will get a bit of nursery fees help too as they both work full time.

    Premier Icon v8ninety
    Subscriber

    the couple on a joint 90k income

    Will also be maximising the benefit of their combined tax free allowance, compared to the ‘high earner/non earner’ couples, which I suspect will make the inequity of this child benefit clusterfudge  look like pocket change.

    We’re moaning that it’s unfair that others with the same or greater household income are still eligible for it.  To make it fair, it should have been based on household income, and where the household income is greater than 50k it gets tapered off, to zero at 60k.

    Yep, I get that. It just surprises me that your reaction isn’t “goodness me, how lucky I am but “its so unfair…”

    It’s a shame you can’t be happy with what you have.

    In response to martinhutch: touche ( with the relevant acute/grave obvs)

    Another point to people bemoaning the situation for the single high earners is that they would have been way better off in the kids’ early years than the couples with 2 similar salaries.

    (Doesn’t make the CB situation right, but just wanted to add it for balance

    footflaps
    Member

     To make it fair, it should have been based on household income, and where the household income is greater than 50k it gets tapered off, to zero at 60k.

    Everyone (with children) used to get it without any means testing. Then George Osbourne (IIRC) decided they wanted to save some money, so decided to make it means tested. HMRC came back and said doing the means testing properly (per household) would cost more than it would save (a lot more). So they kludged it, knowing all the anomalies (which were discussed at the time).

    slackalice
    Member

    HMRC really are a bunch of see you next tuesdays’. Fortunately this **** up isn’t affecting us.

    However, having recently been charged for tax credit overpayments that go back to 2009, despite giving them all accurate information by their deadline each year, they made a mistake and now want to rectify that mistake by demanding payment. First thing we knew about it was a letter from a debt collection agency. How’s that for our government selling off their debts to private businesses?!

    Trying to talk to HMRC was a waste of everyone’s time and their response to letters was virtually non existent.

    £2.5k! We have told them we can afford £20/month and now pay by DDI.

    Talking to a few people about this and they’ve been similarly charged and dealt with in the same uncompromising manner. They giveth with one hand… Gideon and the pig **** need sorting aht, properly.

    So for you people now trying to sort this clusterf… out, you have my sympathies. Whilst knowing that they’re seemingly trying to claw back the national debt by screwing the individuals who can’t afford to contest, be safe in the knowledge that multi-nationals, offshore accounts and foreign ‘investors’ are duly paying f all.

    Sweet eh?

    Premier Icon stumpyjon
    Subscriber

    It was a headline grabbing populust policy that was ill thought through aimed at higher rate tax payers who would garner little sympathy from most voters who Osbourne was trying to appeal to. The principle of higher income families not receiving it is absolutely fine, the unfair way it has been done is not, and that applies to tax and benefits in general. As a couple both incomes are taken into account when benefits are assessed to keep benefits down but when it comes to maximising tax the couple is treated as two individuals. If you’ve entered into contract to be a couple (marriage, civil partnership) the allowances should combined before tax and benefits should be assessed on joint income as it is now.

    The argument from Osbourne at the time was it was too difficult to assess using both incomes, which is odd because they were more than able to do it with tax credits. The reality was it was aimed at rich people, households with 2 30k incomes probably don’t consider themselves highly paid but a household with a single income of 60k was fair game.

    The tax system is riddled with headline grabbing and short term measures, one of the reasons it’s so complex and easy to avoid paying what you owe if you can afford an accountant. It needs a proper overhaul but there will be too many middle income (floating voters) negatively impacted who benefit from the current mess so itll never get sorted.

    Premier Icon grumpysculler
    Subscriber

    The other daft thing about this charge is that it removes 1% of your child benefit per £100. So depending how many children you have, your effective marginal tax rate varies. In theory, you could have a marginal tax rate exceeding 100%.

    My wife is going to be liable for the child benefit charge this year (or rather would be, if we weren’t going to put the money in a pension instead to remove the liability). It is effectively another 25% tax on top of the 42%, for a total 67% marginal rate in that 50k-60k band.

    Premier Icon jam bo
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    Careful grumpysculler. thegeneralist will be along with his humility stick shortly….

    jam bo

    That made me proper laugh out loud that did.

    Yes cretins, be thankful for what the lord has given you.   etc

    jonm81
    Member

    Glad this has come up as I didn’t know anything about it having been a long way under the threshold when my wife signed up to child benefit.  Turns out I have been liable for the additional tax for the last couple of years but have never checked as my wife organises and gets paid the benefit.

    The chap on the phone from HMRC was very good and they are going to adjust the tax code to recover the shortfall for FY 17/18 and waive any fines as I reported it to them.  Still stuck doing tax return for the next 18 years though.  Well worth phoning them and reporting it before they contact you!

    Time to increase pension contributions to knock net salary under the threshold I think.

    DT78
    Member

    lots of people I know up their pension contributions, so in dome ways a good thing as forcing people to save more.  depends how big your outgoings are and whether you can afford to tie up the cash.

    on the flip side when HMRC owed me £10k for a stamp duty refund they took about 10months to get round to it.  I asked if I was able to fine them for slow payment, funny enough no.

    Premier Icon jam bo
    Subscriber

    They pay a decent rate of interest I think?

    ferrals
    Member

    I have nothing of real relevance to add, but given that this is about kids and many couples end up with one stopping work or going part time, this might be of interest to some:

    Marriage allowance

    saves a few hundred quid at least

    wrightyson
    Member

    Be wary of the married tax allowance also as I’m paying that back as well due to bonuses 😆

    jonm81
    Member

    Depends how big your outgoings are and whether you can afford to tie up the cash.

    Aye, but I can up my pension contributions or the government will take it in tax against the child benefit so either way I am going to lose it at the end of every month.  One way or the other that money is going to be tied up.  Makes more sense to me to increase my pension pot (plus the increased contribution from my employer) than to give it to the government to waste.

    5lab
    Member

    My wife is going to be liable for the child benefit charge this year (or rather would be, if we weren’t going to put the money in a pension instead to remove the liability). It is effectively another 25% tax on top of the 42%, for a total 67% marginal rate in that 50k-60k band.

    similar things happen as you cross 100k as well (doesn’t affect me personally, I’m just well versed) – tax rate is 40%, nat insurance is 1%, you lose an additional 20% of your income due to tapering of your tax free allowance (so 61% tax so far) and you lose the 15hours/week (~£5k’s worth) per child of free childcare for 3-4 year olds and tax-free childcare (~£2k per child) the minute you cross the line. if you had twins aged 3 in full-time childcare you’d have to earn £133k to have as much take-home pay after childcare costs as someone on £100k!

    The other way to look at this is if you’re on £51k and you take 1k in c2w vouchers, that bike has only cost you £330. flog it at the end of the year for £500 (half price for a year old bike) and you’re being paid 50p/day to ride a brand new bike 🙂 (depending on how your scheme is audited, you may get a bik of £250, which would mean you only profit £120 instead..)

    Premier Icon sockpuppet
    Subscriber

    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

    So you want someone earning 50001 to be *much* worse off than his mate who did 15 minutes less overtime last year?

    The high marginal tax rate between 50-60k is bad enough, without making it ‘simple’ and worse.

    Premier Icon jeffl
    Subscriber

    Agree with the comments on this. It’s something we’ve been hit with and as people say the tax system is stupid and definitely favours the tax man, but that’s no big surprise. Don’t even get me started on income tax bands. Why we can’t just set it at a fixed 28% tax rate irrespective of your wages I don’t know.

    ji
    Member

    Why cant we just charge income tax on a household, which would seem much fairer?

    The French seem to understand this – https://www.french-property.com/guides/france/finance-taxation/taxation/calculation-tax-liability/

    I guess there is some potential unfairness built in – lodgers, separated (but still living together) couples etc. – but overall it seems a more equitable system

    DT78
    Member

    They pay a decent rate of interest I think?

    about £75 on £10k in 10months.  so nope.  less than inflation

    gonefishin
    Member

    Why we can’t just set it at a fixed 28% tax rate irrespective of your wages I don’t know.

    I suspect that you are wildly underestimating the level at which a single tax band would need to be set at. 28% is less than the combination of the current basic rate plus NI.  I suspect the level would need to be closer to 40%.

    In order to sort all of these issues out we would need a total overhaul of the tax system and more than likely require everyone to do some sort of tax return.

    Premier Icon grumpysculler
    Subscriber

    Yes cretins, be thankful for what the lord has given you

    Tax avoidance? Yes I am quite thankful that we have opportunities to manage how much salary the government take, although I’m not sure some imaginary being has anything to do with it.

    Again, like many others, I have little issue with the principle of high earners (including my wife and I) having benefits taken away and paying a greater share of tax than lower earners. (I actually think we need to increase taxation across the board, but people will only vote for tax rises on other people not themselves). What I do have a problem with is the utterly shite way most of our tax/benefits system is implemented and administered.

    stevextc
    Member

    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.

    This is so true… many people, myself included have taken jobs as PAYE because we don’t know, understand or otherwise want to do Tax amongst other things… if I wanted to have to deal with this I’d probably be in a different job.

    This isn’t just child benefit either, they have messed the 100-150 limit forwards and backwards as well.

    More cynically-minded people might think that HMRC are more interested in the fines.

    To be fair I don’t think so… they have been pretty helpful…. but I still dread their letters.

    I’ve had 2 in the week where they have changed my tax code…

    Just to illustrate how poor the process is for the uninitiated…

    I had to input my bank interest… I went to some trouble to do this and it came to something like £12.71 for the year.

    To get a self appraisal online I had to do some identity thing with an external service provisor… In my case I used the post office.  After all this though ….

    I called them up as the online form wouldn’t let me put the pence…I could put £12 or £13 but neither is correct BUT the declaration I have to make is that it’s correct.  

    The helpful guy had a laugh with me and said either was fine…and £12 or £13 was inconsequential  and he sent me an official email to confirm.

    footflaps
    Member

    What I do have a problem with is the utterly shite way most of our tax/benefits system is implemented and administered.

    The complexity is quite staggering…

    By contrast, the UK tax code has ballooned to a preposterous 10 million words, according to the accountancy body Icas. No single human being understands more than a smallish fraction of it. The 2015-16 edition of Tolley’s yellow and orange handbooks, the tax lawyers’ bible, comes in at a record 21,602 pages. It’s a hopeless, dreadful situation.

    Each government adds more clauses to it, making it more and more complex.

    Premier Icon FB-ATB
    Subscriber

    As the PA increases each year, shouldn’t the limit  be increased in line as well. I guess the £50k & £60k salary limits  in 2013 may be worth c £55k & £65k today

    Premier Icon bearnecessities
    Subscriber

    The complexity is quite staggering

    And then some!

    footflaps
    Member

    As the PA increases each year,

    If only, look up Fiscal drag, been used for ages to suck more people into higher rate tax bracket.

    gonefishin
    Member

    The complexity is quite staggering…

    By contrast, the UK tax code has ballooned to a preposterous 10 million words, according to the accountancy body Icas. No single human being understands more than a smallish fraction of it. The 2015-16 edition of Tolley’s yellow and orange handbooks, the tax lawyers’ bible, comes in at a record 21,602 pages. It’s a hopeless, dreadful situation.

    Each government adds more clauses to it, making it more and more complex.

    The trouble is as soon as you try to simplify it you will inevitably get some winners and some losers and a soon as that happens you also get people whining and bleating that “it’s not fair” because they have to pay more tax than some other group.

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