Tax to repay - Child Benefit

Author
Discussion

Eric Mc

122,010 posts

265 months

Tuesday 27th January 2015
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If you make an AVC into an employer scheme - that will count.

Legend83

9,980 posts

222 months

Thursday 5th February 2015
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I just got stung for the entire CB my wife received in 13/14 as like the OP I inadvertently went over the threshold that year. Hold my hands up to this, my fault.

However, I contacted HMRC today who said it was too late to put the amount through my tax code for the current year and I would have to pay the full amount immediately. Is there a cut-off date after which if you submit your return any tax due cannot be adjusted through your code?

Eric Mc

122,010 posts

265 months

Thursday 5th February 2015
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The cut-off for having your 2015/16 tax code amended to collect underpaid 2013/14 tax would have been 31 December - so too late now.

Does the repayment of the Child Benefit mean you have to make Payments on Account for tax year 2015/16 as well?

Legend83

9,980 posts

222 months

Thursday 5th February 2015
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Eric Mc said:
The cut-off for having your 2015/16 tax code amended to collect underpaid 2013/14 tax would have been 31 December - so too late now.

Does the repayment of the Child Benefit mean you have to make Payments on Account for tax year 2015/16 as well?
I have not been asked to but that is not to say I shouldn't be...

J4CKO

41,543 posts

200 months

Thursday 5th February 2015
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Legend83 said:
I just got stung for the entire CB my wife received in 13/14 as like the OP I inadvertently went over the threshold that year. Hold my hands up to this, my fault.

However, I contacted HMRC today who said it was too late to put the amount through my tax code for the current year and I would have to pay the full amount immediately. Is there a cut-off date after which if you submit your return any tax due cannot be adjusted through your code?
My sympathies, I know everyone assumes that those above the threshold will be sat on pots of cash and just pay it but I know that isn't the case for a lot caught out by this badly implemented scheme.

I can see how people miss this, I am pretty rigorous with financial stuff and worked it out, diligently hived off a percentage of the CB over the year and still got stung for an additional £300.

Eric Mc

122,010 posts

265 months

Thursday 5th February 2015
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Rebecca Bennyworth in Taxation magazine has an interesting take on an unforeseen problem with this Child Benefit tax reclaim system.

Here's the scenario

You or your partner THINK you will not be entitled to the benefit so you ask for the benefit to be stopped (the recommended course of action for those who are above the £60,000 threshold).

However, during the year, the income drops below the £60,000 or even £50,000 so you need some or all of the Benefit re-instated. You can apply on line to have the benefit restored.
But the Benefit will only be restored from the date the on-line application is made. It may be that the benefit could have been restored at an earlier point in the year. You cannot make that claim for the earlier amount on-line. You must contact the authorities by phone and explain the situation to them.

Alex

9,975 posts

284 months

Thursday 5th February 2015
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Another example of why means-testing is evil.

Jonathan27

693 posts

164 months

Thursday 5th February 2015
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Maxf said:
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??
Most people I know on that or a fair bit more don't do self assessment!
I don’t see any reason why you would do SA at that level, assuming that the income is pretty straight forward, i.e. one job on PAYE.

Edited by Jonathan27 on Thursday 5th February 13:13

HoHoHo

14,987 posts

250 months

Thursday 5th February 2015
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Eric Mc said:
Rebecca Bennyworth in Taxation magazine has an interesting take on an unforeseen problem with this Child Benefit tax reclaim system.

Here's the scenario

You or your partner THINK you will not be entitled to the benefit so you ask for the benefit to be stopped (the recommended course of action for those who are above the £60,000 threshold).

However, during the year, the income drops below the £60,000 or even £50,000 so you need some or all of the Benefit re-instated. You can apply on line to have the benefit restored.
But the Benefit will only be restored from the date the on-line application is made. It may be that the benefit could have been restored at an earlier point in the year. You cannot make that claim for the earlier amount on-line. You must contact the authorities by phone and explain the situation to them.
Well explained Eric yes

As I mentioned earlier in the thread my accountant has advised we continue to claim and pay back just in case of that scenario and also if anything happens to either one of us there are benefits to be already claiming it..........

If that makes sense!

loafer123

15,440 posts

215 months

Thursday 5th February 2015
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Eric Mc said:
Rebecca Bennyworth in Taxation magazine has an interesting take on an unforeseen problem with this Child Benefit tax reclaim system.

Here's the scenario

You or your partner THINK you will not be entitled to the benefit so you ask for the benefit to be stopped (the recommended course of action for those who are above the £60,000 threshold).

However, during the year, the income drops below the £60,000 or even £50,000 so you need some or all of the Benefit re-instated. You can apply on line to have the benefit restored.
But the Benefit will only be restored from the date the on-line application is made. It may be that the benefit could have been restored at an earlier point in the year. You cannot make that claim for the earlier amount on-line. You must contact the authorities by phone and explain the situation to them.
On the other hand, you could just claim it and treat it as an interest free loan if you breach the threshold and have to pay it back...?

Eric Mc

122,010 posts

265 months

Thursday 5th February 2015
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I think that is the best option - but it does mean signing up for Self Assessment. A lot of people are reluctant to do that.

sidicks

25,218 posts

221 months

Thursday 5th February 2015
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Jonathan27 said:
I don’t see any reason why you would do SA at that level, assuming that the income is pretty straight forward, i.e. one job on PAYE.

Edited by Jonathan27 on Thursday 5th February 13:13
Tax on investment income being the obvious one. Tax relief on pensions / charity contributions being two others!

Eric Mc

122,010 posts

265 months

Thursday 5th February 2015
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Some of the most difficult Self Assessment tax returns I completed this year were for pure PAYE only clients.

PAYE is NOT a guarantee that your tax affairs are correct. In fact, it is often a guarantee that you WON'T pay the correct tax.

Legend83

9,980 posts

222 months

Thursday 5th February 2015
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loafer123 said:
On the other hand, you could just claim it and treat it as an interest free loan if you breach the threshold and have to pay it back...?
The only problem with a loan you get the full amount up front and pay it back over time - I am stuck with the opposite problem. They want it all back straight away!

dave_s13

13,814 posts

269 months

Thursday 5th February 2015
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Eric Mc said:
Some of the most difficult Self Assessment tax returns I completed this year were for pure PAYE only clients.

PAYE is NOT a guarantee that your tax affairs are correct. In fact, it is often a guarantee that you WON'T pay the correct tax.
Say I employed your services to do my (well my wifes) SA tax return, given your fees, would she be better off??

She's a deputy headteacher btw, single income - PAYE and has been for over 16 years.

Or to ask in a different direction. How time consuming is it to complete yourself. Personally I just cannot be bothered with it all and my mrs works stupid hours so filing out a SA form is on the very bottom of her agenda.

Eric Mc

122,010 posts

265 months

Thursday 5th February 2015
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Maybe it shouldn't be.

In other countries (such as the USA) MOST people have to fill in tax returns each year and they seem to cope.

If her income is in the Higher rate Tax bracket she is probably paying the wrong tax - especially if she has some income from investments, pays into a pension or donates to charity.

And that's NOT including any potential HMRC Coding cock-ups - which are fairly common..

dave_s13

13,814 posts

269 months

Thursday 5th February 2015
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No investments, no charity donations - has a teahers pension though obviously.

GT03ROB

13,262 posts

221 months

Thursday 5th February 2015
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dave_s13 said:
Or to ask in a different direction. How time consuming is it to complete yourself. Personally I just cannot be bothered with it all and my mrs works stupid hours so filing out a SA form is on the very bottom of her agenda.
If you have your records in order it is quick & easy if you are straightforward(ish). You will still need to get your records in order for an accountant.

Eric Mc

122,010 posts

265 months

Thursday 5th February 2015
quotequote all
dave_s13 said:
No investments, no charity donations - has a teahers pension though obviously.
Is she receiving a teachers pension or paying into a teachers pension?

If paying into the pension, is she 100% confident that she is getting the full and correct Higher Rate tax relief she is entitled to?

If RECEIVING a pension, is she confident that the allocation of her personal tax allowances between her salary income and her pension income has been done correctly?

RYH64E

7,960 posts

244 months

Thursday 5th February 2015
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GT03ROB said:
dave_s13 said:
Or to ask in a different direction. How time consuming is it to complete yourself. Personally I just cannot be bothered with it all and my mrs works stupid hours so filing out a SA form is on the very bottom of her agenda.
If you have your records in order it is quick & easy if you are straightforward(ish). You will still need to get your records in order for an accountant.
Indeed. Completing and submitting my Self Assessment took no more than 10 minutes (and most of that was messing about with various levels of dividend payments), but driving to work and back on Saturday morning to get a copy of my P60 so that I had the information needed took about an hour.

For some reason I completely forgot about the Self Assessment deadline this year, I woke up in the middle of the night on Friday/Saturday and remembered about it, so just in the nick of time.