Child Benefit Tax Charge
Discussion
Looking for a quick bit of advice please!
I find myself in the position where I’m going to be going past the £50k threshold this year (I know, mere peasant money compared to most of PH…)
I’ve discovered that despite my wife earning significantly less than this that I now have to start to pay back child benefit on a sliding scale, and annoyingly, fill out a self assessment form to do so.
Is there any practical way of avoiding having to do this? I assume I could increase my pension contributions but ideally I want to benefit my family as much as I can now - would salary sacrifice (i.e company car) have the same effect?
I find myself in the position where I’m going to be going past the £50k threshold this year (I know, mere peasant money compared to most of PH…)
I’ve discovered that despite my wife earning significantly less than this that I now have to start to pay back child benefit on a sliding scale, and annoyingly, fill out a self assessment form to do so.
Is there any practical way of avoiding having to do this? I assume I could increase my pension contributions but ideally I want to benefit my family as much as I can now - would salary sacrifice (i.e company car) have the same effect?
Beethree said:
Looking for a quick bit of advice please!
I find myself in the position where I’m going to be going past the £50k threshold this year (I know, mere peasant money compared to most of PH…)
I’ve discovered that despite my wife earning significantly less than this that I now have to start to pay back child benefit on a sliding scale, and annoyingly, fill out a self assessment form to do so.
Is there any practical way of avoiding having to do this? I assume I could increase my pension contributions but ideally I want to benefit my family as much as I can now - would salary sacrifice (i.e company car) have the same effect?
This happened to me and yes the only effective way of avoiding this is to pay the extra into your pension as this isn't counted towards it. Don't try and avoid paying it.I find myself in the position where I’m going to be going past the £50k threshold this year (I know, mere peasant money compared to most of PH…)
I’ve discovered that despite my wife earning significantly less than this that I now have to start to pay back child benefit on a sliding scale, and annoyingly, fill out a self assessment form to do so.
Is there any practical way of avoiding having to do this? I assume I could increase my pension contributions but ideally I want to benefit my family as much as I can now - would salary sacrifice (i.e company car) have the same effect?
MattS5 said:
It's a ridiculous system, when 2 people living together can each earn £49,995 per year and still get paid the allowance. (£99,990 family income)
Yet if 1 person earns £50k, that benefit reduces accordingly, up to £60k ,then it dissapears totally. Regardless of what the partner earns.
Yup, absolutely. Basically punishes you for having a partner who wants to stay at home with the kids.Yet if 1 person earns £50k, that benefit reduces accordingly, up to £60k ,then it dissapears totally. Regardless of what the partner earns.
You can ask to stop receiving child benefit - but that is fraught with danger. For instance, you may be entitled to some, but not all, of the child benefit. If that is the case, you should not stop it entirely. Or, your predicted income levels might turn out to be less than expected, so stopping the child benefit might not have been the right course of action.
If you stop or reduce your child benefit, reinstating it can be problematic and you will only get it from the date you applied to reinstate it, not from a date you were actually entitled to it.
The best thing is to continue to receive it and pay back the correct amount when you have ascertained exactly how much you have over claimed.
At the moment, this is best done by signing up for self assessment and completing a self assessment tax form after the end of each tax year.
Self Assessment is supposed to be coming to an end on 5 April 2026 - and God knows how this system will work when there are no more self assessment tax returns to be completed.
The clawing back of child benefit - and the proposed end of "the annual tax return" all emanate from when George Osborne was Chancellor.
If you stop or reduce your child benefit, reinstating it can be problematic and you will only get it from the date you applied to reinstate it, not from a date you were actually entitled to it.
The best thing is to continue to receive it and pay back the correct amount when you have ascertained exactly how much you have over claimed.
At the moment, this is best done by signing up for self assessment and completing a self assessment tax form after the end of each tax year.
Self Assessment is supposed to be coming to an end on 5 April 2026 - and God knows how this system will work when there are no more self assessment tax returns to be completed.
The clawing back of child benefit - and the proposed end of "the annual tax return" all emanate from when George Osborne was Chancellor.
Beethree said:
Looking for a quick bit of advice please!
I find myself in the position where I’m going to be going past the £50k threshold this year (I know, mere peasant money compared to most of PH…)
I’ve discovered that despite my wife earning significantly less than this that I now have to start to pay back child benefit on a sliding scale, and annoyingly, fill out a self assessment form to do so.
Is there any practical way of avoiding having to do this? I assume I could increase my pension contributions but ideally I want to benefit my family as much as I can now - would salary sacrifice (i.e company car) have the same effect?
Do you receive a car allowance and if so do you get paid a reduced mileage rate from the company? For instance if you receive a car allowance but can only claim 15p a mile from the company in expenses then I believe, well I hope, you can claim the tax back on the difference from 15p a mile from the company to the HMRC rates of 45p a mile. It can help to offset the child benefit tax.I find myself in the position where I’m going to be going past the £50k threshold this year (I know, mere peasant money compared to most of PH…)
I’ve discovered that despite my wife earning significantly less than this that I now have to start to pay back child benefit on a sliding scale, and annoyingly, fill out a self assessment form to do so.
Is there any practical way of avoiding having to do this? I assume I could increase my pension contributions but ideally I want to benefit my family as much as I can now - would salary sacrifice (i.e company car) have the same effect?
MattS5 said:
It's a ridiculous system, when 2 people living together can each earn £49,995 per year and still get paid the allowance. (£99,990 family income)
Yet if 1 person earns £50k, that benefit reduces accordingly, up to £60k ,then it dissapears totally. Regardless of what the partner earns.
They can't take combined income into consdieration for this and yet when it comes to student finance they use both incomes.Yet if 1 person earns £50k, that benefit reduces accordingly, up to £60k ,then it dissapears totally. Regardless of what the partner earns.
Oakey said:
What's replacing self assessment and tax returns?
For self employed individuals, partners and partnerships and landlords, quarterly filing of their income and expenditure details using government approved commercial digital systems i.e. computer book-keeping and accounting systems.For other stuff, everybody else will need to monitor their online tax account and make sure that the details shown on it are true and correct and update the system when changes occur.
This new way of doing things should have been implemented on 5 April 2018. The latest commencement date we have is 5 April 2026 - so eight years late. It's not going as planned, it's safe to say, so it may not happen in 2026 either.
Look on it as HMRC's version of HS2.
ChrisNic said:
Yes getting a company car under salary sacrifice will bring your taxable income down. Do thought be mindful that the BIK has to come off the £50k if you do this so you’ll need to keep your income down further than expected e.g £50k - £1500 BIK in my case.
My son is putting extra into his pension. He might only be 30, but I guess loosing 1248 quid for one child, equates to 2500 before tax and Ni is taken (2074 quid for 2 kids, 2901 for 3, 3728 for 4) So if you are earning £52.5k and have one child it is a no brainer.
Beethree said:
MattS5 said:
It's a ridiculous system, when 2 people living together can each earn £49,995 per year and still get paid the allowance. (£99,990 family income)
Yet if 1 person earns £50k, that benefit reduces accordingly, up to £60k ,then it dissapears totally. Regardless of what the partner earns.
Yup, absolutely. Basically punishes you for having a partner who wants to stay at home with the kids.Yet if 1 person earns £50k, that benefit reduces accordingly, up to £60k ,then it dissapears totally. Regardless of what the partner earns.
She has a decent job, but protecting her career is one thing, but they could compromise on lifestyle.
My suggestion that they could both go part time did not go down.well.
Pit Pony said:
ChrisNic said:
Yes getting a company car under salary sacrifice will bring your taxable income down. Do thought be mindful that the BIK has to come off the £50k if you do this so you’ll need to keep your income down further than expected e.g £50k - £1500 BIK in my case.
My son is putting extra into his pension. He might only be 30, but I guess loosing 1248 quid for one child, equates to 2500 before tax and Ni is taken (2074 quid for 2 kids, 2901 for 3, 3728 for 4) So if you are earning £52.5k and have one child it is a no brainer.
For me I was on 56k with company car BIK included so I was supposed to be paying back 60% of the child, i then got a 4k bonus, that was taxed at 40% and I had to pay back the full £2800
There is something about the child benefit contributing to the state pension contribution of the stay at home parent. I don't know the details, but don't cancel it without checking the ramifications!
Crazy system and as mentioned above you lurch from it being based on one parent's income to both parents if the child goes to university.
Crazy system and as mentioned above you lurch from it being based on one parent's income to both parents if the child goes to university.
Beethree said:
MattS5 said:
It's a ridiculous system, when 2 people living together can each earn £49,995 per year and still get paid the allowance. (£99,990 family income)
Yet if 1 person earns £50k, that benefit reduces accordingly, up to £60k ,then it dissapears totally. Regardless of what the partner earns.
Yup, absolutely. Basically punishes you for having a partner who wants to stay at home with the kids.Yet if 1 person earns £50k, that benefit reduces accordingly, up to £60k ,then it dissapears totally. Regardless of what the partner earns.
(Don't follow that, I'm not an expert).
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