Earning too much for child benefit
Discussion
Due to a decent pay rise, I am now in the position of having to 'give back' our child benefit via extra tax. I am employed (rather than self employed or a company director).
Has anyone any experience of how this is done? Does the tax man contact you at the end of the financial year and request a self assessment is filled in?
At some point I will need to complete a self assessment on account of claiming back tax on my business mileage, will the child benefit issue get picked up then?
Has anyone any experience of how this is done? Does the tax man contact you at the end of the financial year and request a self assessment is filled in?
At some point I will need to complete a self assessment on account of claiming back tax on my business mileage, will the child benefit issue get picked up then?
They wont contact you, the onus is on you to fess up and pay it back. Register for self assessment on their website and fill in a return. There is an option at the start to say it is for child benefit so you get a simpler form. Just enter details from your P60 or end of year payslip and they will calculate the overpayment and you can either pay a lump sum or elect for them to adjust your tax code and take it back over the next year. They will try and adjust your tax code anyway so that you dont underpay in future assuming your pay remains constant.
You can reduce the amount you pay back by buying childcare vouchers or paying more into your pension.
You can reduce the amount you pay back by buying childcare vouchers or paying more into your pension.
rustyuk said:
HMRC may contact you asking for a self assessment or they may not. They will however have your name in a file stating that a self assessment is required and additional tax has not been paid.
If you earn 60k or more it's easier to simply cancel child benefit.
You may lose NI credits if you do that.If you earn 60k or more it's easier to simply cancel child benefit.
rustyuk said:
HMRC may contact you asking for a self assessment or they may not. They will however have your name in a file stating that a self assessment is required and additional tax has not been paid.
If you earn 60k or more it's easier to simply cancel child benefit.
There are ramifications if it is cancelled so check first before doing so. As well as losing the NI credits, if, for any reason your income goes down and you arte eligible to receive Child Benefit again, they will only give you money from the date you tell them you are eligible. Therefore, if you are slow to notify them, you may lose out on money you were entitled to.If you earn 60k or more it's easier to simply cancel child benefit.
The general view in the accounting world that the best course of action is to continue to receive it and pay back what you have to through Self Assessment if necessary. It's a bit of a pin but you won't lose out.
Edited by Eric Mc on Sunday 10th September 08:47
eliot said:
Roman Rhodes said:
You may lose NI credits if you do that.
Explain?https://www.gov.uk/child-benefit/what-youll-get
If the OPs partner is on a low/zero income then not claiming will lose this benefit
(I'm glad I responded to this post as my youngest child is 11 and although I knew of the rule, I didn't know it ended at 12)
hepy said:
Due to a decent pay rise, I am now in the position of having to 'give back' our child benefit via extra tax. I am employed (rather than self employed or a company director).
Has anyone any experience of how this is done? Does the tax man contact you at the end of the financial year and request a self assessment is filled in?
At some point I will need to complete a self assessment on account of claiming back tax on my business mileage, will the child benefit issue get picked up then?
At present when you do SA,there is a box to tick for higher earners that captures this situationHas anyone any experience of how this is done? Does the tax man contact you at the end of the financial year and request a self assessment is filled in?
At some point I will need to complete a self assessment on account of claiming back tax on my business mileage, will the child benefit issue get picked up then?
The pain was for those who had no reason to submit an SA return except for the fact that they had to start completing one just so that they could declare and payback excess Child Benefit.
One of the plans behind the introduction of Making Tax Digital and the Digital Tax Account was that HMRC would have up to date current information about a tax payer and that they could adjust for these regulations in a real time basis.
The problem is that the UK taxation system is so spread out amongst multiple offices with multiple tax and other government agency references for individuals that devising a "smart" system that can join up all these disparate data flows (various taxes, tax allowances, tax credits, benefits etc) is proving to be massively complex and difficult.
Working out the maths to send the Voyager space probes to the extremes of the Solar System is a doddle compared to the multiple tasks facing HMRC and the Department of Work and Pensions and the Benefits Agency.
One of the plans behind the introduction of Making Tax Digital and the Digital Tax Account was that HMRC would have up to date current information about a tax payer and that they could adjust for these regulations in a real time basis.
The problem is that the UK taxation system is so spread out amongst multiple offices with multiple tax and other government agency references for individuals that devising a "smart" system that can join up all these disparate data flows (various taxes, tax allowances, tax credits, benefits etc) is proving to be massively complex and difficult.
Working out the maths to send the Voyager space probes to the extremes of the Solar System is a doddle compared to the multiple tasks facing HMRC and the Department of Work and Pensions and the Benefits Agency.
eliot said:
Hmm interesting - we stopped claiming years ago due to my earnings and the wife earns less than 10k.
Within the last 12 month we checked the wife's Ni situation and she's ok according to the tax people.
Might take another look.
So long as you've registered for child benefit but then elect not to take the payments because you're over the top threshold then you still get the NI credits.Within the last 12 month we checked the wife's Ni situation and she's ok according to the tax people.
Might take another look.
I used claim ours as I was earning between £50k & £60k (after salary sacrifice) so could get some of it, and then filed a self assessment each year so that HMRC could recover what I owed them, but now I'm on over £60k and don't want to salary sacrifice any more of my wages into the pension so opted to stop the payments.
Stopping the payments is fine and does cut down the hassle. Just make sure that if you ever are in a position where you are entitled to them again, het your claim in IMMEDIATELY because they will not pay you for months you weren't claiming, even if you were eligible.
Lots of people have been caught out by this.
Lots of people have been caught out by this.
C0ffin D0dger said:
So long as you've registered for child benefit but then elect not to take the payments because you're over the top threshold then you still get the NI credits.
Ok, that sounds like our situation then - as we have checked her ni situation and it's all good as she's a 'parent' - once the youngest is over 12, she will be able to work more and therefore pay her own NI.Her claiming CB and me filling out SA to pay the bloody thing back seems like madness!
A work colleague of mine was in the same position as me when this all kicked off about 5 years ago.
I fessed up and did the right thing and did my tax return and paid it back. He turned a blind eye for 3 years until they contacted him and he actually fobbed them off.
He got away with paying the last 3 years.
System is a joke, if you are honest you get shafted.
I fessed up and did the right thing and did my tax return and paid it back. He turned a blind eye for 3 years until they contacted him and he actually fobbed them off.
He got away with paying the last 3 years.
System is a joke, if you are honest you get shafted.
Composite Guru said:
A work colleague of mine was in the same position as me when this all kicked off about 5 years ago.
I fessed up and did the right thing and did my tax return and paid it back. He turned a blind eye for 3 years until they contacted him and he actually fobbed them off.
He got away with paying the last 3 years.
System is a joke, if you are honest you get shafted.
I wouldn't believe it for a second. He'll get done for it.I fessed up and did the right thing and did my tax return and paid it back. He turned a blind eye for 3 years until they contacted him and he actually fobbed them off.
He got away with paying the last 3 years.
System is a joke, if you are honest you get shafted.
My colleague thought he'd he away, he hasn't, £250pm coming back out of his wages to repay the debt to HMRC!
What annoyed me with this whole debacle is that it is loaded on one income only and does not take account of a joint hosehold income.
So, when it was introduced you have one income over £50k and get nil. If you and your spouse earn £49k each therefore bringing in £98k to the house you could claim it! Apparantly it was too difficult to administer over and above one income assessment.
Mrs Shanks chose not to work and bring up Shanks Jnr which I was fine with. However when the rules changed due to my income we dot nowt. When I looked at options and a call to HMRC it was far easier to give it up to save all the pain. Total b
ks
So, when it was introduced you have one income over £50k and get nil. If you and your spouse earn £49k each therefore bringing in £98k to the house you could claim it! Apparantly it was too difficult to administer over and above one income assessment.
Mrs Shanks chose not to work and bring up Shanks Jnr which I was fine with. However when the rules changed due to my income we dot nowt. When I looked at options and a call to HMRC it was far easier to give it up to save all the pain. Total b
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