- Child Benefit Tax
I’ve just got the letter from HMRC on this. I’m also PAYE so assumed it was all done magically for me – looks like I need to have an uncomfortable conversation with HMRC tomorrow…
I see people mentioning “Salary Sacrifice” above – would paying into an employee share scheme count? It comes straight out of my wages.Posted 2 months agooldagedpredatorSubscriber
Whilst the singletrack hive mind is a good source of debate and information – HMRC webpages on gov.uk cover very very close to everything you need to know. The guidance the people on the phones work from is basically the same information in a different format.
If you want to know if a share scheme is salary sacrifice then there’s always:
There is a child benefit:
There’s a child benefit calculator and also a bit on the SA over £50,000 rule.Posted 2 months ago
Read the rules, new rules inserted. I no ideas I had to start self assessing as always PAYE. So the rules changed, not denying I had not paid the correct amount of tax, just that I had nothing through the post to alert me to change the way I assess my tax situation and that as a family who claims CB I may need to check my tax liability’s .
To the point I was still receiving the same letter each year asking me if my circumstances had changed to notify them…which by the way I did, but nothing! There are thousands and thousands of people who have been caught unawares here, regardless of the fact the new process is clearly not fair as it’s based on one persons income alone. It’s the fact if you are found to have underpaid you cannot agree a method of payment via an adjusted tax code or monthly payment scheme (remember you are paid CB monthly)
Just to reiterate the point that not all higher rate earners are snorting lines of coke whilst speeding in their Ferrari’s.Posted 2 months agopolyMember
Nobody read the rules before they sign up for these things?
Claimed child benefit for 5 years+
Well aware of the rules, nothing for free without a catch.
Many of the people who have been caught out are:
1. Not the recipient of the benefit (simply the partner of the recipient) so may well not have signed up, or had any reason to “read the rules”.Posted 2 months ago
2. The rules changed, and for reasons only obvious to HMRC, rather than treat like every other payroll tax they enforced self assessment on people who had never previously needed to consider tax.
3. Likely to have been claiming for up to 13 years before the change without being liable.
4. possible unaware their partner was even still receiving the benefit as the (original) high profile publicity around the policy said it would be cancelled rather than recovered as a tax.
5. (Understandably) Astonished that HMRC have taken 5+ years matching two lists to identify the likely parties; meaning they then have bills perhaps upto 20% of their Net Annual salary to pay, including interest and penalties etc…
6. Were possibly below the earning threshold when the initial publicity came out (there is some suggestion HMRC wrote to some people who they identified were above the threshold at the time) but subsequently became qualifying earners (probably the same for people who “acquired” a family!) and received nothing from HMRC to alert them…
The only thing wrong with your reasoning is
The rules changed, and for reasons only obvious to HMRC,
It’s the chancellor/treasury who make the rules. I’m sure HMRC wouldn’t design such a bit of a mess of a process for recovering a small amount of benefits in the grand scheme of things.
Edit, interesting swear filter substitution there!Posted 2 months ago
From Poly’s list – 2, 3 and 6 definitely apply to me, with a bit of 5 thrown in for good measure.
I’m now trying to find payslips, P60s and P11Ds from 2013 to now. I also find payslips fairly unreadable, it’s not clear what counts against me and what’s potentially in my favour. Surely the whole point of PAYE is that amateurs like me don’t get this stuff wrong…
Not only am I now struggling to work out how much I owe, but I have the potential threat of penalty fines (no indication of how large) for failing to pay a tax I was unaware wasn’t being handled for me.
For the record, I don’t begrudge any of the tax I pay and if I need to pay something back because of this that’s fair, however if I have to pay it in one lump it’s going to sting and if there’s a fine on top I’ll be weeing in George Osborne’s shoes…Posted 2 months ago
For the record, I don’t begrudge any of the tax I pay and if I need to pay something back because of this that’s fair, however if I have to pay it in one lump it’s going to sting and if there’s a fine on top I’ll be weeing in George Osborne’s shoes…
sorry to say I had to pay mine back in a lump. I can’t remember how much exactly but I’m pretty sure it was something like £5700 which included interest and fine. Which they reduced to the ‘minimum’ because they accepted I was not a fraudster, just perhaps a little naive. I asked if I could pay monthly and was told the only way was to wait for it to go to court and then set an arrangement up! I didn’t fancy that so paid up. We were moving house at the time and Christmas was coming so it put us in a really shitty situation to be honest.Posted 2 months ago
As i said previously in this thread and about 18 months ago when I first found out about it, HMRC have employed new staff purely to hunt out this kind of evil, tax dodging, illiterate, badly informed scum.Posted 2 months ago
Also, as before don’t stop claiming it, just put it aside and pay back when you get your bill, people’s situations change and according to our accountant it can contribute to a partners ni payments and it can be a real bastard to set back up once cancelled.mottygMember
I got caught out to the tune of 5 grand going back 4 years as I’m right on the threshold with a company car means any substantial bonus I get I pay 40% tax and lose 2500.00 in child benefits my wive is part time to look after the kids doesn’t seem a lot of sense going over the 50000 threshold if you have a number of kids i least now I know I can plan around it no way I’m working my arse of the give the chancellor 6500 of a 10000 bonusPosted 2 months ago
My only complaint is that the process is harder than it should be.
– HMRC have all the relevant details so it should be taken straight out of PAYE – like all my other tax is
– As the above isn’t the case there should be a straight-forward list of allowances that can off-set it
I’ve been through the calcs and I have 3 different figures for each financial year depending on whether something is allowed or not. I work for a US company and the finance dept obviously aren’t clued up on UK Child Tax benefit details. I’m currently in a position of not knowing which is correct and seemingly having no way to work it out.
On top of this, while going through all the docs, it looks like my P60 could be incorrect for one of the years making it look like I earned a lot more than I did.
Bit stumped as to what to do next to be honest. Do I just assume the worst case set of figures are correct and potentially overpay just to be on the safe side? If so, that’ll be a very expensive assumption…Posted 2 months ago
Rang HMRC, they tell me that no employee share schemes qualify for offsetting against the amount owed. It seems odd as I’ve seen various references to it.
It sucks, but at least it simplifies things…
For what it’s worth I’m no where near the figures you mention, essentially I have various “benefits” through work that push me over the lower threshold.Posted 2 months ago
wrightyson, you mean ‘if you’ve earnt £59.99k TAXABLE it makes no difference.’ You could earn 10 times that but dump all bar £50k into a pension (subject to the yearly threshold for contributions, and the lifeltime threshold) and leave a TAXABLE pay of £49.99K and happily keep all your child benefit that year.Posted 2 months ago
Most people with a pension probably pay at least 5%, and many will pay 15 or more. So actually people need to be earning £55k to nearish to £60k gross before they start to lose child benefit.2tyredMember
Also in this club and just had to stump up a few years’ worth in one go.
Never self-assessed before (I’m PAYE! Surely that’s half the point!) but now going to have to.
Spoke to a very helpful person at HMRC who supplied a nugget of information that may help people in a similar position to me.
I was sent a self-assessment form for year ending April 2019 which arrived after the stated cut-off date for paper submissions (31 Oct). It stated I could submit online by Jan 31 2020, fair enough I thought, that’s what I’ll do.
When I called HMRC to pay the amount owed for previous tax years, I asked what would happen with 2018/19, as the self-assessment I’ll submit will state I need to repay the child benefit received in that year. Advisor advised that I had until 7 Feb to submit, either using the form or doing online, but the child benefit charge would be due in full on 8 Feb, after which it’s fines and interest. Yikes! Nowhere did it mention this on the correspondence.
What I can do however is ‘code it out’ – ie have my self-assessment update my tax code, meaning that the amount due for 2018/19 comes out of PAYE from April 2020. That to me seems the sensible way to do it. However, the cut-off date for that being possible (not advertised anywhere I can see) is December 31, so the self-assessment needs to be in by then. The advisor advised that to make this deadline, I would have to submit online as paper forms “sit in a big pile no-one looks at for 3 months” and a submitted form would miss that deadline. Online submissions are processed immediately, apparently.
In order to do an online self-assessment, if you’ve never done one before, you need register on the government gateway site to request an access code, which they send out to you by post within 7 days (so it says). Only once you have this can you do an online self-assessment.
Super-simple, eh? Jesus wept. 🙂Posted 1 month ago
wrightyson, you mean ‘if you’ve earnt £59.99k TAXABLE it makes no difference.’ You could earn 10 times that but dump all bar £50k into a pension (subject to the yearly threshold for contributions, and the lifeltime threshold) and leave a TAXABLE pay of £49.99K and happily keep all your child benefit that year.
But surely that’s no help in a lot of these instances, surely the tax year has gone, you cant go dumping money you’ve had which is stated on a p60 for that year backdated in to a pension can you?Posted 1 month agostevemuzzyMember
I got caught out as despite my company car costing 500pcm to lease, so 6k plus about 300 to insure, the hmrc saw it as a 15k benefit on my p11d.
My salary was below 50k but with car it went beyond.
Also have the problem that the mrs was made redundant, has not been working so needed to get ni somehow. Its still q mess 2years on, I had to pay just under 2k in a lump sum. They wouldnt take a credit card either!Posted 1 month ago
What I can do however is ‘code it out’ – ie have my self-assessment update my tax code, meaning that the amount due for 2018/19 comes out of PAYE from April 2020. That to me seems the sensible way to do it. However, the cut-off date for that being possible (not advertised anywhere I can see) is December 31
They told me just this week that I couldn’t add it to next years code because I’d missed some date or other. They did it last year though. 🙁 Not so painful this year as my daughter went over the age of receipt quite soon after the start of the tax year, but I wish they’d be a bit consistent.Posted 1 month agophiljuniorMember
I think it is a bollocks tax.
Luckily me and my ex broke up just as my earnings reached the lower threshold for this, but for various reasons, her going part time and me going part time wasn’t viable.
It is faintly ridiculous that now we’ve broken up she gets a huge wad of benefits* and I pay her no more in maintenance than I used to put into her account anyway, AND we don’t get affected by this tax. Way to keep families together, Tory ****.
* Not a comment on their adequacy, but the benefits obviously amount to £ks a months, and were not in any way paid to her when we were together, even when I earned half as much and she was out of a job, which to be frank wasn’t financially possible to manage!Posted 1 month agopyranhaSubscriber
Don’t rely on them stopping either, when you no longer have a qualifying child. On my return for last year, I stated that CB had ceased, and when but they still added it on at the full rate for this year’s tax code. The second person I spoke to was helpful (they aren’t all, and it’s not worth persevering if they’re not – just politely end the call and dial again) but it’s frustrating that they don’t actually process the information they’ve been given.
My department at work runs a 12,000 person payroll, and I know HMRC take very little notice of the data we are obliged to send them every month, judging by the tax codes they send us.Posted 1 month agoAlpha1653Subscriber
So this has got me a bit worried. My wife (full time mum) has been claiming CB since the birth of our child in 2016. My salary just tripped over £50k in Aug 17. Due to peculiarities with my job, I’ve had an accountancy firm submit annual SA for me since about 2014, which obviously includes my total salary and the total of CB I received in that tax year.
I presume this means that HMRC *should* be aware that my salary has gone above the threshold and they *should* have started to claw back the CB in my monthly taxes. Or am I going to get hammered with a bill of hundreds of pounds?!
I should add that once submitted the SA invariably results in me getting a tax rebate. I presume HMRC aren’t so stupid as to pay me a tax rebate if I actually owe them??Posted 1 month ago
I presume HMRC aren’t so stupid as to pay me a tax rebate if I actually owe them?
They did for me last year, £780 rebate then a letter stating I owed them £780! I mean I feel for them as someone who is a recent SA tax payer thanks to the CB rule change situation. It’s horrendously complicated from a Tax payer perspective, so god knows how much of a mess it must be operating inside of HMRCPosted 1 month agoDT78Member
@alpha if you pay an accountant to do this for you they should be making sure it’s right. If you are just over 50k, most likely your pension contributions take you back under. Use the calc on the gov website linked above
And I agree it’s needless complicated. I have no idea why it has been designed so badly. Surely a simpler system would be easier to administer and therefore cheaper to run, giving a net greater return which could mean the need for lower taxes…..or more money to spend on useful stuff like the nhsPosted 1 month agoAlpha1653Subscriber
Thanks chaps. Pension contributions won’t take me under as I don’t pay any. I’ll check with the accountants on Monday but the tax return they completed correctly states under the High Income Child Benefit Charge section the amount my wife has received so I can’t see how HMRC won’t be aware. Fingers crossed 🤞🏻Posted 1 month agoircMember
So this has got me a bit worried. My wife (full time mum) has been claiming CB since the birth of our child in 2016. My salary just tripped over £50k in Aug 17. Due to peculiarities with my
Don’t forget that becoming a higher rate taxpayer also means you will lose the marriage allowance if you currently claim it. Worth £250 a year.
So if you went £1000 into the higher rate bracket you would lose £650 in higher tax. Leaving £350 of that £1000 less any superannuation etc.
Worth looking at making pension contribution equal to the amount past £50k. Exact amount will vary depending on your other circumstances.Posted 1 month ago
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