Child Benefit Tax Charge
Discussion
The Rotrex Kid said:
Well, no reprieve today then!
A 2% reduction in NI, so you get to keep 2% more of your money, but you’ll be taxed on that and there’s 2% more towards your higher earner child benefit payback
I don't think you get taxed on 2% saving - currently as tax payer upto the higher rate tax threshold you pay 32% (20% income tax and 12% NI) after the tax free allowance. From 6th Jan you will pay 30% (20% income tax and 10% NI). There is a 2% saving and it doesnt affect income tax or CB tax.A 2% reduction in NI, so you get to keep 2% more of your money, but you’ll be taxed on that and there’s 2% more towards your higher earner child benefit payback
The freeze of income tax thresholds until 2028 is the real kicker.
MattS5 said:
It's a ridiculous system, when 2 people living together can each earn £49,995 per year and still get paid the allowance. (£99,990 family income)
Yet if 1 person earns £50k, that benefit reduces accordingly, up to £60k ,then it dissapears totally. Regardless of what the partner earns.
It's a British person's birth right to benefits.Yet if 1 person earns £50k, that benefit reduces accordingly, up to £60k ,then it dissapears totally. Regardless of what the partner earns.
Daughter was telling us today that her husband (and therefore her) have been "caught" by this.
He got a letter from HMRC advising him he may be liable - so at least they do seem to picking it up and advising people now.
They have (what seems to us, anyway) an odd relationship with money for a young family - they keep their own accounts and pool an amount to cover household expenses. She doesn't know with any accuracy how much he earns.
His solution (and she agrees, as she doesn't want to get into a discussion about it) is that she should stop claiming. No suggestion that he will "compensate" her for the loss of getting on for a couple of hundred quid a month.
He got a letter from HMRC advising him he may be liable - so at least they do seem to picking it up and advising people now.
They have (what seems to us, anyway) an odd relationship with money for a young family - they keep their own accounts and pool an amount to cover household expenses. She doesn't know with any accuracy how much he earns.
His solution (and she agrees, as she doesn't want to get into a discussion about it) is that she should stop claiming. No suggestion that he will "compensate" her for the loss of getting on for a couple of hundred quid a month.
GiantEnemyCrab said:
It does have the advantage of counting as NI credits I think though? Don't know how any aspect of paying it back affects that but putting this comment here so it prompts someone into clarifying 
This is why we still claim it, and pay it back under self-assessment. Don’t quite trust HMRC not to screw up my wife’s NI credits if we stop, and also claiming it and using SA let’s me keep full tax allowance and park the equivalent of the tax owed into a high interest account each month.Sheepshanks said:
Daughter was telling us today that her husband (and therefore her) have been "caught" by this.
He got a letter from HMRC advising him he may be liable - so at least they do seem to picking it up and advising people now.
They have (what seems to us, anyway) an odd relationship with money for a young family - they keep their own accounts and pool an amount to cover household expenses. She doesn't know with any accuracy how much he earns.
His solution (and she agrees, as she doesn't want to get into a discussion about it) is that she should stop claiming. No suggestion that he will "compensate" her for the loss of getting on for a couple of hundred quid a month.
I wouldn't say that was odd, I'm not aware of anyone who has joint accounts for anything other than household bills. He got a letter from HMRC advising him he may be liable - so at least they do seem to picking it up and advising people now.
They have (what seems to us, anyway) an odd relationship with money for a young family - they keep their own accounts and pool an amount to cover household expenses. She doesn't know with any accuracy how much he earns.
His solution (and she agrees, as she doesn't want to get into a discussion about it) is that she should stop claiming. No suggestion that he will "compensate" her for the loss of getting on for a couple of hundred quid a month.
We have a joint account for that then our own accounts for everything else, granted I'm the only contributor to the joint account, she claims CB to her own account and I'm currently footing the higher rate charge and likely going to cancel it this year or next as it's not worth it.
DaveH23 said:
I wouldn't say that was odd, I'm not aware of anyone who has joint accounts for anything other than household bills.
We have a joint account for that then our own accounts for everything else, granted I'm the only contributor to the joint account, she claims CB to her own account and I'm currently footing the higher rate charge and likely going to cancel it this year or next as it's not worth it.
That’s exactly how we do our finances. Pretty normal, I think.We have a joint account for that then our own accounts for everything else, granted I'm the only contributor to the joint account, she claims CB to her own account and I'm currently footing the higher rate charge and likely going to cancel it this year or next as it's not worth it.
okgo said:
Depends doesn’t it.
When you’re married, given you’ll have to give away half if they leave anyway, why wouldn’t you just pool it for ease?
We have a joint account for everything day to day. But if spending on personal accounts for presents and work expenses etc.
For ease? When you’re married, given you’ll have to give away half if they leave anyway, why wouldn’t you just pool it for ease?
We have a joint account for everything day to day. But if spending on personal accounts for presents and work expenses etc.
You already had your own accounts, doing nothing is ease.
Surely setting up an additional account, moving/updating DD's/SO's is additional admin or am I missing something?
Maybe. But budgeting, forecasting, generally everything that ‘matters’ is IMO easier if you can see exactly what goes out at all times.
We get paid into our bank accounts and on that day transfer £xxxx and then I spend 60 seconds divvying up the bills/spending/frivolity pots and then once a week refresh the weekly spending amount.
Everything beyond the £xxxx that we get paid I know we can save.
We get paid into our bank accounts and on that day transfer £xxxx and then I spend 60 seconds divvying up the bills/spending/frivolity pots and then once a week refresh the weekly spending amount.
Everything beyond the £xxxx that we get paid I know we can save.
DaveH23 said:
okgo said:
Depends doesn’t it.
When you’re married, given you’ll have to give away half if they leave anyway, why wouldn’t you just pool it for ease?
We have a joint account for everything day to day. But if spending on personal accounts for presents and work expenses etc.
For ease? When you’re married, given you’ll have to give away half if they leave anyway, why wouldn’t you just pool it for ease?
We have a joint account for everything day to day. But if spending on personal accounts for presents and work expenses etc.
You already had your own accounts, doing nothing is ease.
Surely setting up an additional account, moving/updating DD's/SO's is additional admin or am I missing something?
The majority of stuff is joint spending anyway, it also makes things easier with things like maternity/ uneven pay etc.
okgo said:
Depends doesn’t it.
When you’re married, given you’ll have to give away half if they leave anyway, why wouldn’t you just pool it for ease?
We have a joint account for everything day to day. But if spending on personal accounts for presents and work expenses etc.
This is incorrect. If they leave and they earn less than you then you have to give more than half.When you’re married, given you’ll have to give away half if they leave anyway, why wouldn’t you just pool it for ease?
We have a joint account for everything day to day. But if spending on personal accounts for presents and work expenses etc.
Senex said:
This is incorrect. If they leave and they earn less than you then you have to give more than half.
Indeed. I’ve heard of some truly bizarre marriages in the finance department. “He’s got enough cash to survive until Feb, I could lend him some after that I guess” someone we know on her husband just being made redundant, despite them owning a property together and trying for a kid.
DaveH23 said:
I wouldn't say that was odd, I'm not aware of anyone who has joint accounts for anything other than household bills.
We have a joint account for that then our own accounts for everything else, granted I'm the only contributor to the joint account, she claims CB to her own account and I'm currently footing the higher rate charge and likely going to cancel it this year or next as it's not worth it.
Does your other half have an income of her own (apart from the CB)?We have a joint account for that then our own accounts for everything else, granted I'm the only contributor to the joint account, she claims CB to her own account and I'm currently footing the higher rate charge and likely going to cancel it this year or next as it's not worth it.
All the major household expenses are split 50 / 50 but then daughter is picking up the tab from her own account for the (not inconsiderable) incidental expenses that are involved in raising a couple of kids.
I don’t know how normal that is, but on that basis it seems bonkers for her to just shrug and give up the CB.
Each to their own and all that, but I find some people's finances as married couples baffling. It's like they are living as individuals waiting for the inevitable divorce or something. His and hers money? Not knowing what the other earns? Wtf are you on. You're a couple now, ie. you're in it together, yes? It's the pair of you, forever and ever etc? Who gives a sht if one of you earns more than the other, it sounds like a pair of stingy first daters splitting a bill.
We put everything in one place and pay out what is required, making financial decisions and purchases together based on what we have, for needs and wants. We're in it together.
We put everything in one place and pay out what is required, making financial decisions and purchases together based on what we have, for needs and wants. We're in it together.
Sheepshanks said:
DaveH23 said:
I wouldn't say that was odd, I'm not aware of anyone who has joint accounts for anything other than household bills.
We have a joint account for that then our own accounts for everything else, granted I'm the only contributor to the joint account, she claims CB to her own account and I'm currently footing the higher rate charge and likely going to cancel it this year or next as it's not worth it.
Does your other half have an income of her own (apart from the CB)?We have a joint account for that then our own accounts for everything else, granted I'm the only contributor to the joint account, she claims CB to her own account and I'm currently footing the higher rate charge and likely going to cancel it this year or next as it's not worth it.
All the major household expenses are split 50 / 50 but then daughter is picking up the tab from her own account for the (not inconsiderable) incidental expenses that are involved in raising a couple of kids.
I don’t know how normal that is, but on that basis it seems bonkers for her to just shrug and give up the CB.
Horses for courses. My wife and I are financially independent, we have a joint account for emergency funds and holidays. These days she earns about 25% less than me. But I cover around 70% of the household bills, as obv I have more disposable income.
Children's are on the horizon, at which point I'll cover all bills, and she can spend from the joint account as required, I'll just maintain an agreed amount in there.
With reference to child benefit it seems I'll be in the 'flux zone', between 50k and 60k, sometimes more sometimes less depending on workflow (overtime/shift/working away). How do people manage this best, put the CB in an account and pay back what's required at the end of the year? It seems crazy you can't retrospectively get this benefit based on the previous years earnings.
Also I have some stocks and shares, outside of a wrapper, if they start paying dividends I assume I'll have to self assess and these might accrue to tipping me over the thresholds also.
Children's are on the horizon, at which point I'll cover all bills, and she can spend from the joint account as required, I'll just maintain an agreed amount in there.
With reference to child benefit it seems I'll be in the 'flux zone', between 50k and 60k, sometimes more sometimes less depending on workflow (overtime/shift/working away). How do people manage this best, put the CB in an account and pay back what's required at the end of the year? It seems crazy you can't retrospectively get this benefit based on the previous years earnings.
Also I have some stocks and shares, outside of a wrapper, if they start paying dividends I assume I'll have to self assess and these might accrue to tipping me over the thresholds also.
r44flyer said:
Each to their own and all that, but I find some people's finances as married couples baffling. It's like they are living as individuals waiting for the inevitable divorce or something. His and hers money? Not knowing what the other earns? Wtf are you on. You're a couple now, ie. you're in it together, yes? It's the pair of you, forever and ever etc? Who gives a sht if one of you earns more than the other, it sounds like a pair of stingy first daters splitting a bill.
We put everything in one place and pay out what is required, making financial decisions and purchases together based on what we have, for needs and wants. We're in it together.
You are absolutely correct but not in every case, no two people are the same. I am a saver, my wife is a spender. In our case a joint account would be financial chaos. Therefore I manage the household expenses, we have a small joint account for incidentals plus she has her own money for spending. We are happy this way knowing the sensible one is running the budget.We put everything in one place and pay out what is required, making financial decisions and purchases together based on what we have, for needs and wants. We're in it together.
Obviously major changes like houses and cars are discussed.
Edited by Senex on Thursday 28th December 10:35
Cats_pyjamas said:
With reference to child benefit it seems I'll be in the 'flux zone', between 50k and 60k, sometimes more sometimes less depending on workflow (overtime/shift/working away). How do people manage this best, put the CB in an account and pay back what's required at the end of the year? It seems crazy you can't retrospectively get this benefit based on the previous years earnings.
.
You submit a tax return after April. The CB they want back they take through your tax code (or the highest earner's tax code)..
It has been my experience that spouses do not like giving you their CB (or some of it) to help you pay your tax bill, best thing is to let the spouse keep it and you have to just suck it up and pay the taxperson.
In an ideal world a couple with children should not get married and should both earn £49,999 per annum.
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