Child Benefit Tax

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  • Child Benefit Tax
  • Premier Icon willv
    Subscriber

    tell me what you know as just got the letter from HMRC and trying to find all the info I need to calculate it?

    Premier Icon peajay
    Subscriber

    Got caught with this, paye so oblivious to these things ended up with 3 years worth back dated, £3200 ouch!

    We were totally unaware too – we were told that apparently there had been a national ad campaign, so no need to write to anyone to warn them about it.

    We paid it back, they wanted a fine on top, but eventually they waived that. I’ve got no qualms about CB being means tested to some extent but it is a shambolic system.

    Premier Icon tthew
    Subscriber

    It’s calculated as part of self assessment which is reasonably straightforward to submit online if that’s the only thing you have outside of PAYE.

    Takes about 7 days for an account for SA to be set up, they have to send you a code.

    If you are at 60k or close you may as well just cancel the benefit.

    Premier Icon slackalice
    Subscriber

    It’s nothing short of a scam. We too have had to repay close to £3000 of supposed overpayments, despite us providing them with all the information they required each year on a timely basis. They backdated some of our ‘overpayments’ to 2009! When we tried to appeal we were eventually informed we were too late as their appeal deadline had passed.

    No one to talk to there, correspondence by letter, complete refusal to enter into any discussions, they are a bunch of ****.

    Pretty much everyone I know with kids who has used this tax credit system to assist them has been victim to this government fraud and yet there’s next to no publicity. Quite what relevance means testing has to do with their reclaims? We are certainly nowhere near the £60k mark, nor are many of the other people who have had similar experiences to us.

    We no longer subscribe to their child tax credit/working tax credit system.

    The thing is, it was they who calculated the amounts we were due and paid! Effectively they’re now trying to recoup the mistakes they made because not even they understood the frikkin system! Although personally it feels more like a stealth tax!

    The one hand giveth and the other taketh away! Bitter? Moi? Damn **** right I am. ****.

    votchy
    Member

    Got caught out with this too, now have the joy of filling in self assessments every year which is just duplicating my P60 as we no longer receive child benefit and have repaid our over payments.

    wrightyson
    Member

    You should not stop receiving it. Been advised by a very good accountant to keep taking the payments then put them aside to pay back. It also contributes contributes some way to your NI figures and as mrsws is zero hours that’s why we also do it. Peoples circumstances change and it’s apparently a right ball ache to set up again.
    My biggest hugest gripe is as I always quote.
    a married couple on 49999 (100k household) each will recieve the full amount, one person on 60k and wife staying at home bringing up kids (60k househkld) gets nothing
    Oh and I also spoke to someone high up in taxman land and she said it (2 years ago) was their biggest current purge and had employed extra people to claw it all back as they knew there were tens of thousands who just weren’t aware..

    Premier Icon tthew
    Subscriber

    Good point Wrightyson, not really considered that.

    Votchy, you’ll probably get let off soon. I did as soon as I declared on my last return that child benefit had finished, but then I had been aware and squaring up every year. Sure they won’t make you do it forever because PAYE is much easier for them to administer.

    Premier Icon Kryton57
    Subscriber

    Got caught last year after we claimed this when out first was a baby – 10 years ago.   We don’t qualify now but HMRC continued to pay it.  Luckily, it was being paid into a bank account my wife still had open but didn’t use – we had over £5k of payments in it luckily not spent.  We just paid it back and argue against the fine which we didn’t pay.

    Premier Icon matt_outandabout
    Subscriber

    a shambolic system

    The acronym for that is HMRC.

    Premier Icon robbo1234biking
    Subscriber

    Started paying it about 2 years ago. Luckily that was the first time we needed to actually pay. Although I have no confidence in how they come up with the calculations and the tax code.

    I just enter the details from my P60 as there are no other incomes which makes it pretty easy to do the self assessment online. Prob takes about 30 minutes in total.

    Premier Icon miketually
    Subscriber

    a married couple on 49999 (100k household) each will recieve the full amount, one person on 60k and wife staying at home bringing up kids (60k househkld) gets nothing

    First person goes part time, second person gets a part time job – you get two lots of tax-free allowance, keep the child benefits, share the parenting and both keep career progression going? Win, win, win, win?

    Premier Icon bearnecessities
    Subscriber

    Some of you are confuddling the original Child Benefit question, where the means-testing came in a few years ago, with stories of Child Tax Credit overpayments  🙂

    As you were.

    Premier Icon timbog160
    Subscriber

    I find HMRC to generally be OK, certainly far better than they were, IF you are armed with a modicum of knowledge about ie if you know you need to repay your child benefit it’s quite straightforward to do on self assessment, but if you don’t I agree it can be v frustrating. Recently changed contracts (but not jobs) and the new employing company decided to put me on a D1 tax code (everything at 50%). HMRC sorted it within 10 mins on phone (albeit after a 20 min queue time)…

    Premier Icon oldtennisshoes
    Subscriber

    I screwed up my SA return last year and got caught out with it. I had a fine suspended for good behaviour and had to pay it back. My fault but smarted a little.

    neilnevill
    Member

    Don’t forget it’s >£50k taxable pay before it’s reducing, so take your pension contributions off your gross pay. If you’re still >£50k think about extra pension contributions as getting the child benefit effectively makes the pension contribution cheaper.

    I’m over £50k gross but under after pension so happy that wife is getting full child benefit. However I hadn’t realised until reading this that they didn’t wrap it into your PAYE tax code, that’s really stupid… Great, I’ll have to do self assessment in a year or… Ten. Fabulous.

    zntrx
    Member

    Don’t forget it’s >£50k taxable pay before it’s reducing, so take your pension contributions off your gross pay. If you’re still >£50k think about extra pension contributions as getting the child benefit effectively makes the pension contribution cheaper.

    Also remember that it’s calculated after any salary sacrafice, so you can deduct childcard vouchers (at least the ones I get which are the original vouchers @243/month) and cycle to work payments.

    neilnevill
    Member

    Oh yes. Which makes the means tested chilled benefit even more odd, as those salary sacrifice schemes save higher earners far more than lower earners! Maybe I should take another look at the bike to work scheme…. Although the rules in our scheme about residual value seemed to make any saving pretty small.

    Premier Icon miketually
    Subscriber

    Which makes the means tested chilled benefit even more odd, as those salary sacrifice schemes save higher earners far more than lower earners!

    The high earners never seem to complain about this…

    Premier Icon robbo1234biking
    Subscriber

    That’s a good justification for the Mrs though – I need a new bike to reduce my salary so we keep getting child benefit 🙂

    DT78
    Member

    See I find this bloody confusing. I think I might have been overpaying it but I am not sure and have been paying the higher amount to be safe and not get fined

    I read you were supposed to use the number on your P60 indicated with the * (pay and income tax details / in this employment).

    As far as I can tell this number seems to be my salary minus child care vouchers and C2W. But it does not seem to be minus my work pension (which is a good chunk of money).

    So should I be manually taking the pension contributions from the starred number and using that?

    If that’s the case taxman owes me the money I’ve paid back…

    And it really should be advertised somewhere – I found out from a mate down the pub, I’d always been PAYE so had no idea I might need to start doing SA;s

    wrightyson
    Member

    I think HMRC recommend anyone over 50k should do SA. I’ve never understood why when you are basic PAYE.

    Premier Icon tthew
    Subscriber

    So should I be manually taking the pension contributions from the starred number and using that?

    No, because the tax relief from that gets paid directly into the pension so you’ve already had that benefit. Use the value as stated.

    I think HMRC recommend anyone over 50k should do SA. I’ve never understood why when you are basic PAYE.

    If you’ve got savings, get any shares dividends, want to claim relief on professional fees, income from a second job or any other source of income, it’s worth doing it whatever your salary. If none of that applies, then yeah, PAYE is fine.

    tomcrow99
    Member

    We just got stung with this as wife (Dr) increased her hours which pushed her over the threshold without realising. Nearly 2 years so approx £3k. They’ve worked out a payment plan for half and we pay the rest as a lump sum in the next SA return. Bloody annoying. As above in principle I have have no issue with it being means tested but the implementation is shockingly poor.

    neilnevill
    Member

    DT78, taxable pay doesn’t include employee pension contributions so that should be taken off if it isn’t already, but I haven’t a p60 in front of me to tell you the answer to your Simple question. Perhaps your pay slips will make it clearer? For example.

    Gross pay in tax year say…. £58000
    Salary sacrifice (child care vouchers and b2w) of £4000
    Employee pension contributions £5000

    Your taxable pay is £49000
    Net pay….a lot less due to tax and ni.

    In the above example, if you weren’t doing the salary sacrifice taxable pay would be £53000 and you would be taxed to reclaim 30% of the child benefit. So making extra pension contributions of £3000 gross would cost a lot less net (40% of £3k, plus 30% of your child benefit total which depends on the number of kids, less). Hence extra pension can be very attractive in this scenario.

    Premier Icon MoreCashThanDash
    Subscriber

    Worth pointing out that HMRC don’t decide the legislation, they just have to try and enforce it, usually at short notice, with not enough staff or training, usually done by staff earning a chunk below the average £24k a year wage.

    Please direct your anger at stupid rule changes/legislation/obvious inequality towards your elected representatives.

    Premier Icon Greybeard
    Subscriber

    As above, HMRC are shambolic. They’ve just sent me an email asking if I need any help completing my tax Return, after having previously told me they don’t expect me to send one.

    Premier Icon tthew
    Subscriber

    What MoreCashThanDash said is true, and this one was more than stupid as the £50-60k tapering bit was last minute fudge to placate voters. Originally any families with an earner greater than £50k were just going to lose it.

    If you’re on close to £60k and have 2 kids, your tax rate for that £10,000 is about 60%!!

    DT78
    Member

    2 different answers to my question! If I deducted pension contributions from the number on my p60 I’d still have to pay some back but a lot less

    Understand I have had the tax relief however that does not take into account the child benefit charge. So depending on how you work it out I can potentially retain quite a large %

    gonefishin
    Member

    If you’re on close to £60k and have 2 kids, your tax rate for that £10,000 is about 60%!!

    That’s just one of the many “hidden” marginal tax rates that are present in our tax system. From the removal of benefits as earnings increase at the lower end to the pension tax relief taper at the upper.

    Premier Icon tthew
    Subscriber

    2 different answers to my question! If I deducted pension contributions from the number on my p60 I’d still have to pay some back but a lot less

    Use the figure as stated. That is literally the instruction they give you on the first page of the return, in fact it was automatically filled in for me this year.

    Premier Icon russyh
    Subscriber

    We got caught by this a few years ago now.  From memory it was £5k+ in total which includes a fine.  Very frustrating as to be honest we didn’t even notice we received it!  Plus being PAYE I wasn’t aware I had to do anything different or that the rules had changed.  When challenged I was told there was a TV campaign and that negligence is no defence despite me saying I don’t tend to watch TV. I was interviewed over the phone, charged interest on the balance and fines.  Given 14 days to pay! The only option for a payment plan would be through court!! So I just coughed up.

    as others have said what really sticks is, like many families, our income is heavily biased to the main bread winner.  I earn well over the threshold to claim, but my wife doesn’t.  So we actually could earn less than others who could claim.  The whole system is a bit of a joke and I suspect is forcing some people to borrow money to rectify their miss claimed benefit

    TheBrick
    Member

    First person goes part time, second person gets a part time job – you get two lots of tax-free allowance, keep the child benefits, share the parenting and both keep career progression going?

    Frequently not possible. Let’s not concerned with reality though this is are.

    Premier Icon jam bo
    Subscriber

    what would make more sense is the ability to fully transfer a tax allowances from one partner to another.

    or means test Child benefit properly across a household.

    instead we got a poorly thought out and poorly implemented lashup.

    Premier Icon timbog160
    Subscriber

    Ironically enough @DT78 your username sounds like a HMRC form! 😀

    DT78
    Member

    I’m trying to come up with some witty comment about being difficult to work with, obtuse, and like sending threatening letters about fines about confusing unpublicised rule changes, whilst taking years to return any tax even if you’ve filled out all the forms in triplicate.

    neilnevill
    Member

    Indeed Jambo, married persons tax allowance is a joke.

    Premier Icon richmtb
    Subscriber

    Its a stupid system. It means tested but only after paying you the full amount and the only way to claw it back is through a bloody self assessment.

    Also the money if very often paid to your partner, unless specified otherwise its by default paid to the mother. So you are having money clawed back that you might not even have seen!

    The thing is as I was now forced to submit a self assessment I just made sure I claimed for every legitimate expense. It’s easy to just not bother submitting a claim for business mileage, for example, if you need register for self assessment but if you are forced to submit one because of this stupid system then I’m damn well going to fill in that bit of the form too.

    I don’t really have an issue with them means testing it, there are plenty of people that need the money more than I do, but they way they have implemented just seems bloody minded and Kafkaesque. The whole “you should have known” thing is bollocks, they are happy to write to you to tell you your tax code for the year.

    I’m reminded of this from THHGTTG

    “But the plans were on display…”
    “On display? I eventually had to go down to the cellar to find them.”
    “That’s the display department.”
    “With a flashlight.”
    “Ah, well, the lights had probably gone.”
    “So had the stairs.”
    “But look, you found the notice, didn’t you?”
    “Yes,” said Arthur, “yes I did. It was on display in the bottom of a locked filing cabinet stuck in a disused lavatory with a sign on the door saying ‘Beware of the Leopard.”

    Premier Icon weeksy
    Subscriber

    money clawed back that you might not even have seen!

    Welcome to my world. I paid back £2600 that the wife had received

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