Self Assessment and Child Benefit Help

[Senex]

So it looks like I am going to go over 50k earnings this year i.e. by the first of April.

I am a PAYE tax payer and never usually do a tax return.

I understand I will need to complete a self-assessment tax return because we receive child benefit for one child.

When do I do this?

When do I register with HMRC? I believe it is 10 days previously?

Thanks in advance.

[princeperch]

You presumably know this but it's not 50k earnings you need to worry about. It's 50k net adjusted income. I.e:

You earn 58k. You pay 6.1k into your pension via PAYE, give a grand to charity and take out a cycle to work salary sacrifice for 1k.

Your net adjusted income is 49,900 and no tax return is required.

[Tim330]

Does it need to be via salary sacrifice to the pension?

[princeperch]

Ideally yes if you want to avoid having to do a tax return. If you're making a payment outside of PAYE to your pension to bring you in at 50k net adjusted income you'll then need to do a tax return to tell HMRC about it and get the tax relief on it at the correct rate.

[Senex]

princeperch said:

You presumably know this but it's not 50k earnings you need to worry about. It's 50k net adjusted income. I.e:

You earn 58k. You pay 6.1k into your pension via PAYE, give a grand to charity and take out a cycle to work salary sacrifice for 1k.

Your net adjusted income is 49,900 and no tax return is required.

No I did not know that. (and thank you for answering)

My income is in three parts, only one is for employment and I pay 5.54% to work pension..

I am forecasting that by the end of March I will have contributed about £1460 to pension.

I am forecasting my total salary to end of march about £52231

So if I remove pension contribution it should be about £51321

So I need to shed £1321?

We have no cycle to work scheme, charity sounds like an option (but a generous one) or increase my pension contributions?

It's a Civil Service pension and instructions are not very clear how to do that, and anyway is it not too late in the year now? Any added contribution will surely be mostly for next year?

[Senex]

So, I just had a look at the civil service pension portal.

I could make a lump sum contribution BUT..

The cut off date is 10 February 2023 for added contributions this year. *sigh

So what would be my best option, doing a tax return or donate to charity?

[Aunty Pasty]

For this year there is plenty of time. The deadline for online submissions for the 21-22 financial year has only just past so for the 22-23 years it be something like Jan 24.

Have a look here to get yourself sorted so you can do it online. https://www.gov.uk/self-assessment-tax-returns

[Eric Mc]

Doing a tax return is not a big deal. As long as you do one when you are required to do it.
If you have to complete a tax return for 2022/23, you do not have to submit it until 31 January 2024 at the latest.
That is also the date by which you have to pay your 2022/23 self assessment tax bill - including any refund of Child Benefit received.

[princeperch]

@senex your pension contributions sound very low. Are you quite sure those are the correct figures?

[CorradoTDI]

Avoid the tax return if you can...

I had the same issue recently and started a thread... what I didn't realise is that any interest made from savings has to be declared and gets added to your income.

This was just over a £500 for me so I ended up paying an additional £100 HICBC than I'd expected it it to be.

[Senex]

Aunty Pasty said:

For this year there is plenty of time. The deadline for online submissions for the 21-22 financial year has only just past so for the 22-23 years it be something like Jan 24.

Have a look here to get yourself sorted so you can do it online. https://www.gov.uk/self-assessment-tax-returns

Well that's a bit confusing. So the deadline for tax returns for the financial year 2022-2023 is January 2024?

The other deadline, for contributing more to the civil service pension is definitely 10 February 2023 (the way I read it).

[Senex]

CorradoTDI said:

Avoid the tax return if you can...

I had the same issue recently and started a thread... what I didn't realise is that any interest made from savings has to be declared and gets added to your income.

This was just over a £500 for me so I ended up paying an additional £100 HICBC than I'd expected it it to be.

I only have a few thousand in savings.

[Senex]

princeperch said:

@senex your pension contributions sound very low. Are you quite sure those are the correct figures?

5.54% of salary is the contribution for the Civil Service Alpha pension.

Looking at my most recent pay statement, so far this year (with two months to go)

Taxable pay: £25,496; pensionable pay: £22,587

Employee's pension Contribution: £1216

Employer's pension contribution: £6121 (Ka-Ching!)

Gross Pay: £26,713

Tax paid: £4950

I have two other sources of income, a pension of about £20,000 on which I pay 20% tax and the state pension of about £717 per month (since July 2022) which is taxed at 20% through my employer's PAYE.

[quinny100]

Your Civil Service pension contributions are probably deducted from your gross salary, so you’ll already have benefited from tax relief and will have the adjusted income reported to HMRC via PAYE. I’m not 100% as I’ve never been in the Civil Service but that is certainly how other public sector schemes are operated.

This is why your Taxable Pay + Pension Contributions = Gross Pay (give or take a quid for rounding). It’s the Taxable Pay that will be reported to HMRC.

You could open a private pension and contribute to that if you need to bring it down further.

Edited by quinny100 on Saturday 18th February 00:05

[AndyAudi]

Senex said:

So I need to shed £1321?

We have no cycle to work scheme, charity sounds like an option (but a generous one) or increase my pension contributions?

Look at what it will cost you, £150, might get an accountant to help you it if you really need (you won’t) for a couple of hundred,

Don’t go chucking £1k at a charity to save a bit of straight forward paperwork!

Have a figure what the plan is for the next year though if you are planning to continue working & taking pensions (can you stop or reduce the £20k one?)
[url]

As you are already retired & drawing pension you might find yourself limited to the amount of contributions you can actually make to “reduce” your income


|https://thumbsnap.com/ZChr72rM[/url]

[Senex]

OK then so just to clarify, I should wait until the end of March to see exactly how much I earned 2022-2023 and then submit a self-assessment?

And there is no rush to do this, I have until January 2024?

[Eric Mc]

Yes.
Once 5 April 2023 has passed, review your situation and see if any of the Child Benefit needs to be repaid.
If some or all of it needs repaying , notify HMRC that you want to submit a 2022/23 tax return.
They will give you a Self Assessment Tax Reference (SATR). You will have until 31 January 2024 to submit the return and pay any liability arising,

[Senex]

Thank you.

[KTF]

A daft question maybe but do you only need to submit a tax return only if HMRC tells you to or is it down to the individual to be proactive and send one in if they think they meet the criteria?

Also, if the individual is meant to send one in and does not (doesn't realise, etc) do you get fined or a letter asking you to submit one?

[LowTread]

I registered for self assessment once my earnings breached the 40% tax band so that i could claim higher rate pension relief.

I rang HMRC about putting in my first tax return to be told that i don't need to. They just asked over the phone how much i had paid into my pension from net earnings in the last year. They then cancelled the self assessment registration.

I'm in the same boat as you this year. Wife has claimed CB. I had a few big pay rises over the last 18 months, and i've also temporarily stopped salary sacrificing into my pension, so my salary is way over the level for full CB payback. But i've also been putting a bit more into my workplace pension, so there's some higher rate relief to offest it.

Note that between £50k and £60k the effective tax rate is 58% if you have kids. They claw CB back at 18%.

Personally this has messed with my head somewhat. I've been trying to keep earnings under £50k by sacrificing into my pension, but cost of living means i just can't do it anymore. First world problems and all that...