Child Benefit, Higher Tax Payer

cleagarr_2

Hello,

I was wondering if someone could clarify the following for me;

Before tax and pension contribution I earn £44,079 which seems to take me over the 40% tax threshold for child benefit £42,476 meaning I will lose the benefit which is worth £2,256 to me (next year, I know, but trying to think about things now).

However, with my pension contribution at 6.4% (£2,821 per year) my remaining taxable income is £41,258. Does this mean (as things stand in terms of tax thresholds etc.) I will be just under the threshold and will still receive child benefit?

MANY THANKS

xylophone

http://moneyfacts.co.uk/news/pensions/pension-contributions-could-preserve-child-benefit/
http://www.revenuebenefits.org.uk/child-benefit/policy/policy-changes/
http://www.hmrc.gov.uk/rates/it.htm
http://www.hmrc.gov.uk/incometax/relief-pension.htm

cleagarr_2

xylophone wrote: »

http://moneyfacts.co.uk/news/pensions/pension-contributions-could-preserve-child-benefit/
http://www.revenuebenefits.org.uk/child-benefit/policy/policy-changes/
http://www.hmrc.gov.uk/rates/it.htm
http://www.hmrc.gov.uk/incometax/relief-pension.htm

Fourth link states;

"Occupational or public service pension schemes
Usually your employer takes the pension contributions from your pay before deducting tax (but not National Insurance contributions). You only pay tax on what's left. So whether you pay tax at basic, higher or additional rate you get the full relief straightaway."

So there is my answer.

Cheers for that xylophone. :T

thriftychick

My OH earns just under the threshold for higher rate tax however, if the company does well, he will receive a bonus during the year (unknown amount) which will take him over the threshold. If so, does anyone know if we will have to repay all the child benefit we receive in 2012/13?

Bean_Counter

thriftychick wrote: »

If so, does anyone know if we will have to repay all the child benefit we receive in 2012/13?

Does this apply from the 2012/13 tax year? Articles such as this one on MSE state that it will be reduced from 2013.

Does this mean from the 2013/14 tax year?

markdavey

This article clearly states it is from January 2013

thriftychick

Thankyou for posting that article markdavey. "In other words, child benefit would continue being paid but it would be clawed back from higher rate taxpayers either by being deducted from monthly pay packets or through a bill at the end of the tax year". It looks like it starts in January 2013 and will have to be repaid if the threshold is crossed during the tax year. As I understand it then, it will be during the 2012/13 tax year if so, I think it is best to save it up just in case.

melly1980

cleagarr wrote: »

Hello,

I was wondering if someone could clarify the following for me;

Before tax and pension contribution I earn £44,079 which seems to take me over the 40% tax threshold for child benefit £42,476 meaning I will lose the benefit which is worth £2,256 to me (next year, I know, but trying to think about things now).

However, with my pension contribution at 6.4% (£2,821 per year) my remaining taxable income is £41,258. Does this mean (as things stand in terms of tax thresholds etc.) I will be just under the threshold and will still receive child benefit?

MANY THANKS

provided that they dont change the rules then this appears to be the case. Im not banking on it at the moment because they have changed the pension rules for universal credit such that only 50% of your contributions can be deductable.

shop-to-drop

thriftychick wrote: »

My OH earns just under the threshold for higher rate tax however, if the company does well, he will receive a bonus during the year (unknown amount) which will take him over the threshold. If so, does anyone know if we will have to repay all the child benefit we receive in 2012/13?

Probably best to get the bonus paid into his pension unless they change things before then.

thriftychick

I think if January 2013 is the date for the change, it will catch alot of people out and they will end up repaying all the child benefit received during 2012/13. I am already repaying all the working tax credit I received during the year my OH was unemployed which amounted to £3,200 because he got a job part way through the year, if he had started work on April 6th, we wouldn't have to repay a penny.