Child Benefit Tax Charge
Discussion
Itll be interested to see what their plan is for the combined household (probably no plan as they won't be in power). With these new rules a household you don't start paying it back until £120k tapered to £160k (if you earned the same amount).
Can't see them setting the combined that high as it would be giving too much away.
Disappointed with the tax bands freezing, would rather that than the 2% NI reduction.
Can't see them setting the combined that high as it would be giving too much away.
Disappointed with the tax bands freezing, would rather that than the 2% NI reduction.
I was 'invited' to register for SA this tax year due to tripping the threshold and having to pay it back.
For next year I probably wont have to pay it back due to salary sacrificing, etc which will bring me under 60k. Do I still have to fill in the SA form next January (I only filled in the child benefit part) or am I stuck doing it every year now?
For next year I probably wont have to pay it back due to salary sacrificing, etc which will bring me under 60k. Do I still have to fill in the SA form next January (I only filled in the child benefit part) or am I stuck doing it every year now?
KTF said:
I was 'invited' to register for SA this tax year due to tripping the threshold and having to pay it back.
For next year I probably wont have to pay it back due to salary sacrificing, etc which will bring me under 60k. Do I still have to fill in the SA form next January (I only filled in the child benefit part) or am I stuck doing it every year now?
You'll still need to file for financial year 23-24 which will have a deadline of Jan '25 if I understand it right, so yes, you will have to file again, but the year after you shouldn't.For next year I probably wont have to pay it back due to salary sacrificing, etc which will bring me under 60k. Do I still have to fill in the SA form next January (I only filled in the child benefit part) or am I stuck doing it every year now?
Winchmore said:
Nice to have the threshold raised. Now there's a dilemma whether to continue adding to sipp to avoid 40% tax, or spend the money....
Similar here.I'm on around £55k and am due a £5k bonus end of April. Wife claims CB so i was looking at a choice of a) bonus into pension and have to pay 50% of CB back, or b) take the bonus and have to pay 100% of CB back.
Now i can take the whole bonus and not have to pay any CB back.
Paying 42% tax and NI on it seems ok given it was going to cost me 64%!
Happy days. And ~£60 more p/m thanks to NI cut, which TBH i really don't agree with. I'd rather that went to the NHS.
RenesisEvo said:
KTF said:
I was 'invited' to register for SA this tax year due to tripping the threshold and having to pay it back.
For next year I probably wont have to pay it back due to salary sacrificing, etc which will bring me under 60k. Do I still have to fill in the SA form next January (I only filled in the child benefit part) or am I stuck doing it every year now?
You'll still need to file for financial year 23-24 which will have a deadline of Jan '25 if I understand it right, so yes, you will have to file again, but the year after you shouldn't.For next year I probably wont have to pay it back due to salary sacrificing, etc which will bring me under 60k. Do I still have to fill in the SA form next January (I only filled in the child benefit part) or am I stuck doing it every year now?
), you should be able to get them to cancel the need for a 2024/25 Self Assessment tax return. However, only do that if you are fully sure.LowTread said:
I've just realised that the diff between standard and higher rate tax is now more of a step.
Up to £50k it's 20% tax and 8% NI now = 28%
Over £50k it's 40% tax and 2% NI = 42%
So a 14% diff.
It used to be 32% vs 42% last year, then 30% vs 42% since jan, and now this.
Worse than that for those of us in Scotland with our "progressive tax rates". Happy for the NI cut because that actually impacts us whereas a tax cut would never be passed on.Up to £50k it's 20% tax and 8% NI now = 28%
Over £50k it's 40% tax and 2% NI = 42%
So a 14% diff.
It used to be 32% vs 42% last year, then 30% vs 42% since jan, and now this.
We will be looking at roughly the below rates not including the updates to child benefit
14k-25k 20% +8%=28%
25k-43k 21% +8%=29%
43k-50k 42% +8%=50%
50-75k 42% +2%=44%
75k-125k 45% +2%=47%
125k+ 48% +2%=50%
The child benefit changes will smooth out the upper end but the 21% jump at 43k stings
Eric Mc said:
RenesisEvo said:
KTF said:
I was 'invited' to register for SA this tax year due to tripping the threshold and having to pay it back.
For next year I probably wont have to pay it back due to salary sacrificing, etc which will bring me under 60k. Do I still have to fill in the SA form next January (I only filled in the child benefit part) or am I stuck doing it every year now?
You'll still need to file for financial year 23-24 which will have a deadline of Jan '25 if I understand it right, so yes, you will have to file again, but the year after you shouldn't.For next year I probably wont have to pay it back due to salary sacrificing, etc which will bring me under 60k. Do I still have to fill in the SA form next January (I only filled in the child benefit part) or am I stuck doing it every year now?
), you should be able to get them to cancel the need for a 2024/25 Self Assessment tax return. However, only do that if you are fully sure.John87 said:
LowTread said:
I've just realised that the diff between standard and higher rate tax is now more of a step.
Up to £50k it's 20% tax and 8% NI now = 28%
Over £50k it's 40% tax and 2% NI = 42%
So a 14% diff.
It used to be 32% vs 42% last year, then 30% vs 42% since jan, and now this.
Worse than that for those of us in Scotland with our "progressive tax rates". Happy for the NI cut because that actually impacts us whereas a tax cut would never be passed on.Up to £50k it's 20% tax and 8% NI now = 28%
Over £50k it's 40% tax and 2% NI = 42%
So a 14% diff.
It used to be 32% vs 42% last year, then 30% vs 42% since jan, and now this.
We will be looking at roughly the below rates not including the updates to child benefit
14k-25k 20% +8%=28%
25k-43k 21% +8%=29%
43k-50k 42% +8%=50%
50-75k 42% +2%=44%
75k-125k 45% +2%=47%
125k+ 48% +2%=50%
The child benefit changes will smooth out the upper end but the 21% jump at 43k stings
RenesisEvo said:
KTF said:
I was 'invited' to register for SA this tax year due to tripping the threshold and having to pay it back.
For next year I probably wont have to pay it back due to salary sacrificing, etc which will bring me under 60k. Do I still have to fill in the SA form next January (I only filled in the child benefit part) or am I stuck doing it every year now?
You'll still need to file for financial year 23-24 which will have a deadline of Jan '25 if I understand it right, so yes, you will have to file again, but the year after you shouldn't.For next year I probably wont have to pay it back due to salary sacrificing, etc which will bring me under 60k. Do I still have to fill in the SA form next January (I only filled in the child benefit part) or am I stuck doing it every year now?
Higher rate relief on pension contributions is still a thing, so you might need SA to claim that back.
Though the first year i was earning into the 40% band i think i rang them up and did higher rate relief over the phone (ooh err!) and they sent me a cheque without having to do SA.
LowTread said:
Remember that at £60k you're still £10k into the 40% band.
Higher rate relief on pension contributions is still a thing, so you might need SA to claim that back.
Though the first year i was earning into the 40% band i think i rang them up and did higher rate relief over the phone (ooh err!) and they sent me a cheque without having to do SA.
At the moment my pension comes out of my salary as a salary sacrifice so I dont need to claim the extra relief back.Higher rate relief on pension contributions is still a thing, so you might need SA to claim that back.
Though the first year i was earning into the 40% band i think i rang them up and did higher rate relief over the phone (ooh err!) and they sent me a cheque without having to do SA.
It is a consideration should I start adding more to the personal pension that I also have after I have been paid though as you say.
This taxation business is a (relative) headache through once you get in to the higher earner category. You can see why some people just get in touch with a specialist to sort it out for them.
So does this mean that, hypothetically, if you earned £120,000 and salary sacrificed 50% into your pension (to get the maximum £60k allowance) you could then claim the full child benefit amount?
What do the tax savings look like on that as a percentage? Assume two children, which would mean claiming approximately £2000. I’ve roughly calculated it as £30,200 so 50% extra cash going to you. Or am I wrong?
What do the tax savings look like on that as a percentage? Assume two children, which would mean claiming approximately £2000. I’ve roughly calculated it as £30,200 so 50% extra cash going to you. Or am I wrong?
Crumpet said:
So does this mean that, hypothetically, if you earned £120,000 and salary sacrificed 50% into your pension (to get the maximum £60k allowance) you could then claim the full child benefit amount?
What do the tax savings look like on that as a percentage? Assume two children, which would mean claiming approximately £2000. I’ve roughly calculated it as £30,200 so 50% extra cash going to you. Or am I wrong?
Don't know exactly, but it's about that amount.What do the tax savings look like on that as a percentage? Assume two children, which would mean claiming approximately £2000. I’ve roughly calculated it as £30,200 so 50% extra cash going to you. Or am I wrong?
The £30K or so isn't going to you just yet though, and right now you're £30K down on where your net income would have been.
Edited by Sheepshanks on Wednesday 6th March 15:45
Crumpet said:
So does this mean that, hypothetically, if you earned £120,000 and salary sacrificed 50% into your pension (to get the maximum £60k allowance) you could then claim the full child benefit amount?
What do the tax savings look like on that as a percentage? Assume two children, which would mean claiming approximately £2000. I’ve roughly calculated it as £30,200 so 50% extra cash going to you. Or am I wrong?
Not sure what impact it has but if they put over 40?k in to pension there's tax implications so would have to weigh that up. Probably a balance though between pension, top range EV and other sacrife schemes.What do the tax savings look like on that as a percentage? Assume two children, which would mean claiming approximately £2000. I’ve roughly calculated it as £30,200 so 50% extra cash going to you. Or am I wrong?
Bloxxcreative said:
Not sure what impact it has but if they put over 40?k in to pension there's tax implications so would have to weigh that up. Probably a balance though between pension, top range EV and other sacrife schemes.
It’s being put up to £60k for 23/24 but employer contributions would affect things as well, I guess. So it would end up being 53% going into the pension (at minimum employer contributions) and therefore over the 60k allowance. I suppose then you’d need to look at EV salary sacrifices. I think another poster was suggesting this too, but I am now tussling with the idea of reducing my pension contributions. I'm currently contributing 30% of my wage into my works pension to bring my taxable income down to £50k as my company car and perks pushes me into the CB clawback.
I could easily pay less into the pension from April to keep below the new £60k clawback threshold, but after cutting back on unnecessary spending, I'm fairly comfortably living off the current pay packet and I like the idea of that pension pot growing which might give an option for early retirement.
I think there will be a whole lot of middle earners significantly reducing their pension contributions from April.
I could easily pay less into the pension from April to keep below the new £60k clawback threshold, but after cutting back on unnecessary spending, I'm fairly comfortably living off the current pay packet and I like the idea of that pension pot growing which might give an option for early retirement.
I think there will be a whole lot of middle earners significantly reducing their pension contributions from April.
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