Tax to repay - Child Benefit
Discussion
J4CKO said:
The big problem is all those who get away without paying anything or nothing like their full whack, if you are PAYE you are screwed.
Lots will be not paying their full whack, so benefits kick in, they get to keep the CB yet are earning more than their PAYE counterpart, I have a mate that gleefully tells me how little tax he pays and how everything "is through the company", a massive new telly for his front room, bought as a business expense.
I cant blame him really but there will be millions like that, it is rife.
You can put whatever you like through the company, no questions asked, until the day you need to justify such expenditure to the taxman, that's when the problems start. The rules are quite clear, small company owners flout them at their peril.Lots will be not paying their full whack, so benefits kick in, they get to keep the CB yet are earning more than their PAYE counterpart, I have a mate that gleefully tells me how little tax he pays and how everything "is through the company", a massive new telly for his front room, bought as a business expense.
I cant blame him really but there will be millions like that, it is rife.
Steve vRS said:
I filled my SA form in last year for the tax year just gone and have to repay the child benefit I was paid. I didn't cancel the CB as I was in the zone where you got some of it but what with promotions and my miscalculation that the BIK of my co. car is classed as an income, I have to pay it all back. So a negative tax code for me from April!
Steve
See my correction above. The BIK IS included in the calculation.Steve
My mistake.
TKF said:
oyster said:
JustAnotherLogin said:
So all bases seem to be covered. Apart from people in the top 2 deciles of uk inome whingeing about not receiving a benefit designed to ensure children could be fed and weren't forced to work
Not quite all bases covered.Couple 1 has 2 earners and children, who both have salaries of £50k.
Couple 2 has 1 earner and children, the earner has a salary of £60k.
Couple 1's take home pay is £72,283
Couple 2's take home pay is £41,941
Guess which couple gets child benefit?
Couple 1 also pays 50% more tax. Only fair they get some back, no?
Eric Mc said:
I should have known really. I've actually completed a few tax returns this year where the BIK has been included in the calculation. Why I didn't notice was that in every case the BIK was relatively small.
Those with company cars had better be very aware of the impact.
Eric, on a related note, you mentioned earlier in the thread that only salary sacrifice company pensions can be used to reduce 'effective' salary below the £50k/£60k CB thresholds? Does that mean normal employee company pension contributions (i.e. not by salary sacrifice) do not count?Those with company cars had better be very aware of the impact.
I'm certain they count towards normal tax relief don't they? E.g if a person earns £45k from their employer and receives £1k in bank account interest, then without pension contributions they will be paying 40% tax on that savings interest. However if their pension contributions (to employer's pension scheme) is say £5k a year then this drops them into the basic rate tax bracket and will also save them a futher 20% tax on their savings? Or am I wrong?
sidicks said:
miniman said:
In my case, yes greater than £60,000 in 2014/15, no to Self Assessment.
Surely you have to be doing self-assessment at that sort of income to ensure you pay the right tax - on investment income, for example??I actually had to phone them up to tell them I still wanted to, and that was just because my income is roughly 60/40 basic to commission, so the amount deducted through PAYE is always at least a few hundred wrong at the end of the year.
oyster said:
Eric, on a related note, you mentioned earlier in the thread that only salary sacrifice company pensions can be used to reduce 'effective' salary below the £50k/£60k CB thresholds? Does that mean normal employee company pension contributions (i.e. not by salary sacrifice) do not count?
I'm certain they count towards normal tax relief don't they? E.g if a person earns £45k from their employer and receives £1k in bank account interest, then without pension contributions they will be paying 40% tax on that savings interest. However if their pension contributions (to employer's pension scheme) is say £5k a year then this drops them into the basic rate tax bracket and will also save them a futher 20% tax on their savings? Or am I wrong?
I didn't think that was what I said. It's certainly not what I meant.I'm certain they count towards normal tax relief don't they? E.g if a person earns £45k from their employer and receives £1k in bank account interest, then without pension contributions they will be paying 40% tax on that savings interest. However if their pension contributions (to employer's pension scheme) is say £5k a year then this drops them into the basic rate tax bracket and will also save them a futher 20% tax on their savings? Or am I wrong?
If you pay into a personal pension out of your own pocket - those pension contributions are generally eligible for tax relief and therefore they will also count towards getting your income below the £50,000 - £60,000 thresholds.
Eric Mc said:
Corpulent Tosser said:
My own view on child benefit is that it should only be given to people who need it, not acrcoss the board.
And how do you assess "need"? The simplest method is to base need on income levels and/or savings - which attracts massive criticism - as seen above.And even then, that can be messy, as indicated by this thread.
Any other attempts to assess need based on other criteria is an even more complicated affair.
Regardless of whether or not we should've been entitled to Child Benefit when we had our kids, we were entitled to it, so we claimed it, and factored it into our household budget.
Then along bimble Cameron and his chums (the same Cameron on record shortly before the last GE saying CB should always remain a universal benefit) and take the whole lot in short order.
If you were a higher rate taxpayer with three kids, that equated to roughly a £5k pay cut. Yes, that might be easier to bear for me than for someone earning £10k a year, but it's still out of order to f
k people's budgeting to that extent just to try and score a political point, whilst the weasels who just claim and don't contribute anything just carry on regardless.I suspect I shall be spoiling my ballot paper at the next GE, because I'm not voting Tory again whilst Cameron is leading the party, and God knows, there's nobody else out there to vote for!!!
Kermit power said:
Eric Mc said:
Corpulent Tosser said:
My own view on child benefit is that it should only be given to people who need it, not acrcoss the board.
And how do you assess "need"? The simplest method is to base need on income levels and/or savings - which attracts massive criticism - as seen above.And even then, that can be messy, as indicated by this thread.
Any other attempts to assess need based on other criteria is an even more complicated affair.
Regardless of whether or not we should've been entitled to Child Benefit when we had our kids, we were entitled to it, so we claimed it, and factored it into our household budget.
Then along bimble Cameron and his chums (the same Cameron on record shortly before the last GE saying CB should always remain a universal benefit) and take the whole lot in short order.
If you were a higher rate taxpayer with three kids, that equated to roughly a £5k pay cut. Yes, that might be easier to bear for me than for someone earning £10k a year, but it's still out of order to f
k people's budgeting to that extent just to try and score a political point, whilst the weasels who just claim and don't contribute anything just carry on regardless.I suspect I shall be spoiling my ballot paper at the next GE, because I'm not voting Tory again whilst Cameron is leading the party, and God knows, there's nobody else out there to vote for!!!
The fact that arbitrary thresholds are used and don't use marginal rates instead of slab rates. OK child benefit has a marginal rate but it's very, very steep. It could have been started in line with the higher rate threshold and then increased gradually to taper off at say £100k or £150k and still saved the same amount.
Same as Labour with the mansion tax kicking in at £2m, as if someone in a house worth £2,000,001 is rich whereas someone in a house worth £1,999,999 isn't.
oyster said:
I think it's the lack of proportionality (or progressiveness) that annoys me the most.
The fact that arbitrary thresholds are used and don't use marginal rates instead of slab rates. OK child benefit has a marginal rate but it's very, very steep. It could have been started in line with the higher rate threshold and then increased gradually to taper off at say £100k or £150k and still saved the same amount.
Same as Labour with the mansion tax kicking in at £2m, as if someone in a house worth £2,000,001 is rich whereas someone in a house worth £1,999,999 isn't.
A cynic might think they're looking for people who've worked their arses off to give themselves a decent standard of living they can rape a bit more every year, but not achieved one so decent that they can and will bugger off to Monaco to protect it when the HMRC comes to pull your trousers down.The fact that arbitrary thresholds are used and don't use marginal rates instead of slab rates. OK child benefit has a marginal rate but it's very, very steep. It could have been started in line with the higher rate threshold and then increased gradually to taper off at say £100k or £150k and still saved the same amount.
Same as Labour with the mansion tax kicking in at £2m, as if someone in a house worth £2,000,001 is rich whereas someone in a house worth £1,999,999 isn't.
dave_s13 said:
They unfairness of the system has been done to death though.
No point banging on about it given they obviously won't budge on this particular stroke of genius.
I am sure HMRC would love to solve the problem. Unfortunately the cost of getting DWP's systems to talk to HMRC's systems properly is more than the savings to be made on restricting CB.No point banging on about it given they obviously won't budge on this particular stroke of genius.
Having been self employed for a couple of years - went back into 'employed' work at the end of 2012.Back onto PAYE and a secure job/salary. As 2013 progressed it became apparent that we would be outside the CB cut-off's - so I got my wife to stop our CB half way through the year. Not had CB for 15 months now - no issues and I'm not that fussed about the cut off's - always hit someone, in this case I benefit from a good job at the expense of our CB - not a bad position really.
Had been waiting to do my tax return knowing this would be in it. The company I work for actually got my PAYE tax pretty much spot on. So it's the half year of CB I need to pay back. I'm working on the basis that it will be in tax bill to be paid in one hit......however if the HMRC are feeling kind and lump it into my tax code for the next year then that will be a bonus.
Interestingly - my wife - who is also back at work has now been notified she no longer needs to do self assessment (she is a TA in a school) - and her rebate last year was about the same as our CB bill. Would be good if the HMRC were able to work on household income and offset 1 vs the other. Maybe one for the future.
Had been waiting to do my tax return knowing this would be in it. The company I work for actually got my PAYE tax pretty much spot on. So it's the half year of CB I need to pay back. I'm working on the basis that it will be in tax bill to be paid in one hit......however if the HMRC are feeling kind and lump it into my tax code for the next year then that will be a bonus.
Interestingly - my wife - who is also back at work has now been notified she no longer needs to do self assessment (she is a TA in a school) - and her rebate last year was about the same as our CB bill. Would be good if the HMRC were able to work on household income and offset 1 vs the other. Maybe one for the future.
Eric Mc said:
I didn't think that was what I said. It's certainly not what I meant.
If you pay into a personal pension out of your own pocket - those pension contributions are generally eligible for tax relief and therefore they will also count towards getting your income below the £50,000 - £60,000 thresholds.
Every day's a school day. Thanks Eric.If you pay into a personal pension out of your own pocket - those pension contributions are generally eligible for tax relief and therefore they will also count towards getting your income below the £50,000 - £60,000 thresholds.
After years of 'smart' pensions contributions my most recent employer doesn't do them. Looks like I need to amend my tax return.
Eric Mc said:
The problem is that many, many taxpayers who have only ever been taxed under PAYE seem to be under the illusion that the PAYE system is deducting the correct tax from their income. In many, many cases it is not.
HMRC does tell taxpayers to check their coding notices and to contact them if they think it's wrong.
The problem is that far too many people don't bother checking or don't understand how the coding system works - so they can't tell if their PAYE is right or wrong.
Sadly, knowing whether it is right or wrong is primarilly the responsibility of the taxpayer and assuming that all is OK can be an expensive mistake.
I never get fewer than two tax coding notices every year, usually it's three or four...HMRC does tell taxpayers to check their coding notices and to contact them if they think it's wrong.
The problem is that far too many people don't bother checking or don't understand how the coding system works - so they can't tell if their PAYE is right or wrong.
Sadly, knowing whether it is right or wrong is primarilly the responsibility of the taxpayer and assuming that all is OK can be an expensive mistake.
All my income is on PAYE, single employer - a tax return is generally essential, just the same.
sanf said:
Interestingly - my wife - who is also back at work has now been notified she no longer needs to do self assessment (she is a TA in a school) - and her rebate last year was about the same as our CB bill.
Hmmm - youir wife gets a tax refund and teh decide she doesn't need to do tax returns?Sounds to me like they intend to NOT refund her tax in future years.
HMRC does have a habit of telling people who normally pay too much tax each year that they don't need to complete tax returns.
Funny that.
Eric Mc said:
oyster said:
Eric, on a related note, you mentioned earlier in the thread that only salary sacrifice company pensions can be used to reduce 'effective' salary below the £50k/£60k CB thresholds? Does that mean normal employee company pension contributions (i.e. not by salary sacrifice) do not count?
I'm certain they count towards normal tax relief don't they? E.g if a person earns £45k from their employer and receives £1k in bank account interest, then without pension contributions they will be paying 40% tax on that savings interest. However if their pension contributions (to employer's pension scheme) is say £5k a year then this drops them into the basic rate tax bracket and will also save them a futher 20% tax on their savings? Or am I wrong?
I didn't think that was what I said. It's certainly not what I meant.I'm certain they count towards normal tax relief don't they? E.g if a person earns £45k from their employer and receives £1k in bank account interest, then without pension contributions they will be paying 40% tax on that savings interest. However if their pension contributions (to employer's pension scheme) is say £5k a year then this drops them into the basic rate tax bracket and will also save them a futher 20% tax on their savings? Or am I wrong?
If you pay into a personal pension out of your own pocket - those pension contributions are generally eligible for tax relief and therefore they will also count towards getting your income below the £50,000 - £60,000 thresholds.
Let's say you earn £100k and in one year you nominate to your employer that you want your pension contributions to be 50%. Will this then make you eligible to receive child benefit?
(assume less than £30k of contributions the previous tax year).
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