High income child benefit tax return - is this right?

[Kiwi79]

Hi PHer's

As with many others I have had the letter from HMRC saying I need to back pay on this - fair enough I wasn't aware of this due to my salary + bonus creeping me over this limit a few years after my daughter was born.

Obviously I need to pay a proportion of it back. So I have had the threatening phone discussion and a few months later they sent me a bill for each year. I go online pay the bill but I am also aware I need to do a return for 18/19 and had been given until end April to do so.

1.) Now when I log into my account is says "business account"at the top - do they always say that?/Is that correct. I am PAYE all the way no side gigs (although about 7 years ago I was self employed so did a return then. Old business does not trade anymore)

2.) The message on the site now say my 18/19 return is overdue (nothing about end April luckily I took a screenshot)

3.) They have stuck on 93 quid in interest which I have paid but then they seem so slow taking the payment it had gone up by 1p the next day. How does anyone ever clear it?

Naturally I can't get through to a real person at HMRC as there are probably about 5 staff members rotating the phones whilst the self employed try to get through due to Coronageddon.

Any answers on any of the above especially 1 much appreciated!

[AceKid]

I have also fallen into the pay range that means i have to do this, first i knew was a letter coming through for 17/18, I just assumed they would change my tax code to take it back. In that year, i ended up with the demand letter and paid, so knew i had to file a tax return for 18/19.
So to do the tax return took ages to setup...somehow i managed to setup 2 accounts! anyway, mine also showed business account on it....however it does clearly state that i had to file it by the end of 2019 and had to pay by Jan 31st this year. Not sure how you thought you had till April......they showed many times the required deadlines....i remember there was even tv adverts last year about the deadlines....
It is a complete ballache doing the returns as i have never had to do this before

[Kiwi79]

AceKid said:

I have also fallen into the pay range that means i have to do this, first i knew was a letter coming through for 17/18, I just assumed they would change my tax code to take it back. In that year, i ended up with the demand letter and paid, so knew i had to file a tax return for 18/19.
So to do the tax return took ages to setup...somehow i managed to setup 2 accounts! anyway, mine also showed business account on it....however it does clearly state that i had to file it by the end of 2019 and had to pay by Jan 31st this year. Not sure how you thought you had till April......they showed many times the required deadlines....i remember there was even tv adverts last year about the deadlines....
It is a complete ballache doing the returns as i have never had to do this before

I too have setup multiple gov gateway accounts. Shouldn't even be possible to do so but hey ho. Reassuring that yours also says business account as my main worry was they had set me up with the wrong type of account. I have a letter from them that says due date for 18/19 is 31 Jan 2020 as per usual or 3 months after notice to file is issue if later - which I'm guessing is why I supposedly have until end April 2020 (this is what they told me on the phone too originally) just a shame it doesn't match what the online account say right now or that every single person I have asked about this on their hotline has different advice (one call handler didn't even seem familiar with their own website)

[A205GTI]

Good luck OP been arguing for best part of 2 years with them on this.

Took them 6 years to inform they had paid to much, then said they wanted back plus interest.

Have a stack full of letters from them with my responses, one letter took 19 months to reply to!!

They say I owe another £1800 but I think it is £900

Frustrating thing is if I was a business I could negotiate it down.

[lampchair]

I had a look at this when ours was born, am I right in thinking that if you earn >£50k it's not worth the hassle of claiming?

ETA: sorry for the hijack

[AceKid]

Kiwi79 said:

I too have setup multiple gov gateway accounts. Shouldn't even be possible to do so but hey ho. Reassuring that yours also says business account as my main worry was they had set me up with the wrong type of account. I have a letter from them that says due date for 18/19 is 31 Jan 2020 as per usual or 3 months after notice to file is issue if later - which I'm guessing is why I supposedly have until end April 2020 (this is what they told me on the phone too originally) just a shame it doesn't match what the online account say right now or that every single person I have asked about this on their hotline has different advice (one call handler didn't even seem familiar with their own website)

The 31st Jan is definitely due date for payment, the 3 months is that the tax return had to be filed by 31st Oct...then 3 months to pay until deadline at end of Jan....thats how it came across to me anyway!

You are right, the system is crap, and i am getting to the point where i wonder if its worth doing and just stop getting child benefit.
I worked it out and as i am only going a small amount over the £50k on taxable pay (have increased pension pot payment, cycle to work, childcare vouchers to reduce taxable amount) it is still worth doing. I think if your taxable pay is over £55k then i personally would stop the benefit

[Kiwi79]

lampchair said:

I had a look at this when ours was born, am I right in thinking that if you earn >£50k it's not worth the hassle of claiming?

ETA: sorry for the hijack

Anything over 60k it isn't worth claiming at all (for every 100 over 50k you have to pay 1% back and they take into account bonus and BIK too I believe, so if you were over that get ready for "the letter". If I had realised at the time we would have cancelled it as the hassle isn't worth if. It was less painful to do a tax return when I was self employed. Rules are rules but what a dumb system when two people can take in 49.9k each and still get 100% of the benefit yet if 1 person earns over 50 you have to pay it back even if your partner doesn't work.

[RammyMP]

I earn over the amount threshold so shouldn’t get child benefit, I haven’t cancelled it so we get it then I do I self assessment at the end of the year and then pay some of it back (I claim for business use of my own car). I see it as an interest free loan!

We had no end of hassle getting it in the first place so I’m reluctant to cancel it and if I get furloughed which is increasingly likely I’ll then drop below the threshold so I won’t have to pay it back.

[lampchair]

Kiwi79 said:

lampchair said:

I had a look at this when ours was born, am I right in thinking that if you earn >£50k it's not worth the hassle of claiming?

ETA: sorry for the hijack

Anything over 60k it isn't worth claiming at all (for every 100 over 50k you have to pay 1% back and they take into account bonus and BIK too I believe, so if you were over that get ready for "the letter". If I had realised at the time we would have cancelled it as the hassle isn't worth if. It was less painful to do a tax return when I was self employed. Rules are rules but what a dumb system when two people can take in 49.9k each and still get 100% of the benefit yet if 1 person earns over 50 you have to pay it back even if your partner doesn't work.

Thank you, I thought that - I read it as basically being a ‘loan’ which you’d need to pay back.

The in laws were very keen on AVCs and things to lower earnings but I don’t think it’s worth looking at.

[Eric Mc]

It catches loads of people out - chiefly those who don't complete Self Assessment tax returns. Those who DO, complete tax returns generally find out with enough warning what their true position is regarding Child Benefit and consequently are far less likely to be taken by surprise.

[a7x88]

We have 2 kids and I’m the sole earner in our house. I was advised that even if you earn over the 60k mark where you have to pay it all back to keep claiming it. I pay it back via my PAYE code. The advantage of still claiming - my wife’s NI contributions are still counted and should we fall below the threshold for whatever reason you can’t get it back paid.

[Kiwi79]

a7x88 said:

We have 2 kids and I’m the sole earner in our house. I was advised that even if you earn over the 60k mark where you have to pay it all back to keep claiming it. I pay it back via my PAYE code. The advantage of still claiming - my wife’s NI contributions are still counted and should we fall below the threshold for whatever reason you can’t get it back paid.

So you don't have to do a self assessment tax return? Sorry if this is a dumb question but how does that work.

[AndyAudi]

As said claiming it does mean your non working partner gets NI credit towards State pension
(& I believe I read something that said this is how National Insurance numbers get assigned to your kids?)

If you know you’re definitely going to be over I think you can register but not take the payments .

[Eric Mc]

Kiwi79 said:

a7x88 said:

We have 2 kids and I’m the sole earner in our house. I was advised that even if you earn over the 60k mark where you have to pay it all back to keep claiming it. I pay it back via my PAYE code. The advantage of still claiming - my wife’s NI contributions are still counted and should we fall below the threshold for whatever reason you can’t get it back paid.

So you don't have to do a self assessment tax return? Sorry if this is a dumb question but how does that work.

No you don't have to do a self assessment tax return - but it can be a very useful exercise.

If you hope to get all tax adjustments done through PAYE, you are effectively placing your tax affairs in the complete control of your employer and HMRC. If you are happy to do that, fine. However, taking charge of your own tax affairs is not a bad thing, in my opinion.

[Zigster]

By coincidence, I just posted about child benefit in the Jobs & Employment forum.

You don't have to claim the child benefit for your wife to get the NI credits. You do have to register but then waive your right to receive it. That's what I've been doing for the however many years since the earnings limits were set.

However, I'm thinking about restarting claiming child benefit. I'm over the £60k limit now, but I think there is a fair chance that I lose my job over the summer as COVID-19 is going to hit the business pretty hard and I can see my role being one which goes.

If I do lose my job in the next few months and can't get another, my income for 2020/21 could be below £60k so I would be entitled to child benefit.

If I do retain my job, I can always repay the child benefit when I do my 2020/21 tax return.

[Pando99]

If you are over the threshold then there is no point in the wife claiming it as you have to pay back 100% through your tax.

[hepy]

Kiwi79 said:

Hi PHer's

As with many others I have had the letter from HMRC saying I need to back pay on this - fair enough I wasn't aware of this due to my salary + bonus creeping me over this limit a few years after my daughter was born.

Obviously I need to pay a proportion of it back. So I have had the threatening phone discussion and a few months later they sent me a bill for each year. I go online pay the bill but I am also aware I need to do a return for 18/19 and had been given until end April to do so.

1.) Now when I log into my account is says "business account"at the top - do they always say that?/Is that correct. I am PAYE all the way no side gigs (although about 7 years ago I was self employed so did a return then. Old business does not trade anymore)

2.) The message on the site now say my 18/19 return is overdue (nothing about end April luckily I took a screenshot)

3.) They have stuck on 93 quid in interest which I have paid but then they seem so slow taking the payment it had gone up by 1p the next day. How does anyone ever clear it?

Naturally I can't get through to a real person at HMRC as there are probably about 5 staff members rotating the phones whilst the self employed try to get through due to Coronageddon.

Any answers on any of the above especially 1 much appreciated!

I can answer Q2. Having been through all this, while your 18/19 might be late, you can still submit revisions to it. I did this in February and managed to reduce the amount I owed significantly by claiming mileage relief.

The silver lining for me is that I didn't know you could claim the mileage relief (thanks to various PH'ers for their help with this), and can now offset my Child Benefit repayment with the mileage claim, so actually they owe me £300 each year.

If you are putting in a self assessment, make sure you claim for everything you can.

[Marlin45]

hepy said:

Kiwi79 said:

Hi PHer's

As with many others I have had the letter from HMRC saying I need to back pay on this - fair enough I wasn't aware of this due to my salary + bonus creeping me over this limit a few years after my daughter was born.

Obviously I need to pay a proportion of it back. So I have had the threatening phone discussion and a few months later they sent me a bill for each year. I go online pay the bill but I am also aware I need to do a return for 18/19 and had been given until end April to do so.

1.) Now when I log into my account is says "business account"at the top - do they always say that?/Is that correct. I am PAYE all the way no side gigs (although about 7 years ago I was self employed so did a return then. Old business does not trade anymore)

2.) The message on the site now say my 18/19 return is overdue (nothing about end April luckily I took a screenshot)

3.) They have stuck on 93 quid in interest which I have paid but then they seem so slow taking the payment it had gone up by 1p the next day. How does anyone ever clear it?

Naturally I can't get through to a real person at HMRC as there are probably about 5 staff members rotating the phones whilst the self employed try to get through due to Coronageddon.

Any answers on any of the above especially 1 much appreciated!

I can answer Q2. Having been through all this, while your 18/19 might be late, you can still submit revisions to it. I did this in February and managed to reduce the amount I owed significantly by claiming mileage relief.

The silver lining for me is that I didn't know you could claim the mileage relief (thanks to various PH'ers for their help with this), and can now offset my Child Benefit repayment with the mileage claim, so actually they owe me £300 each year.

If you are putting in a self assessment, make sure you claim for everything you can.

I was hot by this initially late last year with a fishing mail from HMRC - 'Was I aware that...............?'. I was not but then a 3rd party gets the money and claimed she didn't know either.

HMRC put me on self assessment and so far I have had to repay for 2017-2018 £300 and 2018-2019 £1056. CB is now cancelled (apparently it is 'her money'?) but HMRC will still be after me for 2019 Apr-Nov at some point.

As mentioned above now anyone is on self assessment make sure you claim some expenses for WFH etc. annually. This has reduced my tax by around £260/yr.

[Eric Mc]

Pando99 said:

If you are over the threshold then there is no point in the wife claiming it as you have to pay back 100% through your tax.

Can you tell the future?

Just because you THINK you will be over the threshold in a given tax year does not mean you will be.

Loads of people have been caught out by cancelling the Child Benefit and then finding when they got to the end of the tax year that they had been eligible for it after all.

Backdated claims are limited.

[Eric Mc]

Correct.

The basic rule for claiming tax relief on employment related expenses is that the expense has to have been incurred, "wholly, exclusively and NECESSARILY in the carrying out of your employment".

Exercising an option to work from home, rather than being directed to do so by your employer, means you fail the "necessarily" test.