Anyone had a letter from HMRC yet about Child Benefit Tax?

xylophone

cleaver enough

I am sure that HMRC have cutting edge technology...;)

http://www.hmrc.gov.uk/childbenefitcharge/index.htm
http://www.thisismoney.co.uk/money/pensions/article-2192562/Trick-avoid-losing-child-benefit-boost-pension.html

NEILCM

Very Sharp. i'll have to check my spelling more when writing on these forums,

Cheers Neil

Notjustamum_2

My husband has had a letter. He earns around £53000 per year and I earn nothing. Really not sure how we can be described as "rich" TBH.

I am currently looking for a job but cannot get help with training costs because we are "rich".

This salary gives a monthly net income of £3100 - sounds great doesn't it?

Now take off travel (essential to earn the money in the first place) £160 per month, mortgage £900 per month, endowment policy £90 per month, insurances £150 per month, council tax £145 per month, pension £200 per month - that's half the money gone already. Now pay utilities - our gas and electric is a lot cheaper than our friends at £100 per month, water averages about £25 per month, dinner money for one of the children £12.50 per week for 39 weeks per year works out to £40 per month spread over the year. That's £1,770 now. Then we have to take into account the "free" education our children receive. As I am not on benefits I have to pay in full all the "voluntary contributions" to the children's schools. £50 per year to each of them for school fund, £80 per year for swimming for one of them, so far my junior school child has had trips totalling £75 since September, my secondary school child has had £90 worth and I just got a letter for another one coming up which costs £250 and she does have to go as it will give 30% of the mark for one of her GCSEs so miss the trip and fail the GCSE! Food, clothes, shoes, entertainment (one week self catering in the west country for holidays), house maintenance, car running costs.

Hmm.... maybe I'm not as "rich" as people think....

BUT I wouldn't object to effectively losing my child benefit if everyone with a total family income the same or more than mine lost theirs too but it doesn't work like that. £53,000 pa after tax and NI is just over £3100 pm. Two people earning £26,500 each (£53000 total) would bring home £3424 pm between them so over £300 more PLUS they can keep their child benefit. How on earth can that be fair?

roguetrader1

zagfles wrote: »

It was only half the story. It missed the higher rate relief part.

If you're on £60k, you can pay £8k into a personal pension. That gets grossed up to £10k by your pension provider claiming basic rate relief. Your "adjusted net income" is £50k, so no child benefit loss.

In addition, you get a £2k rebate off the taxman when you do your tax return, as they will extend your basic rate band by £10k giving you a £2k rebate on your tax.

If you intend to do this every year, they may adjust your tax code by adding £5000 to it (so 810L would become 1310L), which will give you that additional £2000 relief in the year rather than as a lump sum when you do the tax return. (£5000 added to you tax code get you 40% relief - resulting in £2000 less tax).

Alternatively - if your company offers a salary sacrifice type pension arrangement, or AVCs etc, you could contribute £10k direct from your gross pay and then you'll only get taxed on the £50k to start with. So you'll get all the 40% relief direct through payroll (plus 2% NI if it's salary sacrifice).

Hi thanks for the above very useful, I think I now have it.
So my understanding based on the above and the fact that my company offer a salary sacrifice type pension scheme on a circa £65k salary I would have to make 15k of salary sacrifice in order to avoid losing child benefit. Is this correct? If so need to work out if I can afford it

InsertWittyName

roguetrader1 wrote: »

Hi thanks for the above very useful, I think I now have it.
So my understanding based on the above and the fact that my company offer a salary sacrifice type pension scheme on a circa £65k salary I would have to make 15k of salary sacrifice in order to avoid losing child benefit. Is this correct? If so need to work out if I can afford it

For salary sacrifice, what you say is correct.

Anon

roguetrader1 wrote: »

Hi thanks for the above very useful, I think I now have it.
So my understanding based on the above and the fact that my company offer a salary sacrifice type pension scheme on a circa £65k salary I would have to make 15k of salary sacrifice in order to avoid losing child benefit. Is this correct? If so need to work out if I can afford it

That is my understanding, apart from I think you need to take into account any other pension contributions already normally made during the tax year and other salary sacrifice (such as childcare vouchers). You are looking to reduce down your gross taxable income simply in order to keep the child benefit while maintaining as much of your net income left over (normal pension planning is a separate issue as for other reasons you may wish to pay more in).

So if you earn £65k and already pay £3k into your pension, you need to pay another £12k to bring it down to £50k (or rather £12,001 to make it £49,999 as I think it kicks in at £50k?).

Anon

shop-to-drop

Notjustamum wrote: »

My husband has had a letter. He earns around £53000 per year and I earn nothing. Really not sure how we can be described as "rich" TBH.

I am currently looking for a job but cannot get help with training costs because we are "rich".

This salary gives a monthly net income of £3100 - sounds great doesn't it?

Now take off travel (essential to earn the money in the first place) £160 per month, mortgage £900 per month, endowment policy £90 per month, insurances £150 per month, council tax £145 per month, pension £200 per month - that's half the money gone already. Now pay utilities - our gas and electric is a lot cheaper than our friends at £100 per month, water averages about £25 per month, dinner money for one of the children £12.50 per week for 39 weeks per year works out to £40 per month spread over the year. That's £1,770 now. Then we have to take into account the "free" education our children receive. As I am not on benefits I have to pay in full all the "voluntary contributions" to the children's schools. £50 per year to each of them for school fund, £80 per year for swimming for one of them, so far my junior school child has had trips totalling £75 since September, my secondary school child has had £90 worth and I just got a letter for another one coming up which costs £250 and she does have to go as it will give 30% of the mark for one of her GCSEs so miss the trip and fail the GCSE! Food, clothes, shoes, entertainment (one week self catering in the west country for holidays), house maintenance, car running costs.

Hmm.... maybe I'm not as "rich" as people think....

BUT I wouldn't object to effectively losing my child benefit if everyone with a total family income the same or more than mine lost theirs too but it doesn't work like that. £53,000 pa after tax and NI is just over £3100 pm. Two people earning £26,500 each (£53000 total) would bring home £3424 pm between them so over £300 more PLUS they can keep their child benefit. How on earth can that be fair?

As he earns £53K and pays £2.4K into pension just get OH to pay a littel more pension and you will be OK.

I get the sentiment though and it's annoying that any pay rise or bonus will be needed to be put into pension.

DitsyDaisy_2

Sorry to crash the party, just looking for advice, my husband earns £63 k and I earn £7.5 k, we got the letter.
My husband pays in by salary sacrifice for a pension, he thinks its £10 k in total, he wonders if his rail season ticket costs are applicable for tax relief, he donates to charity by direct debit each month does this also come off the annual income total?
I was told today by the self assessment helpline that we would have to repay the child benefit received from April 2012 to April 2013 if we are over the 50k limit. This amounts to a repayment of £1441 for us ( 3 kids). Can anyone confirm or expand these queries for me? Never had to fill in tax forms before as PAYE, but husbands job subject to a reorganisation so I don't want to give up child benefit in case our circs change drastically in the near future... Many thanks to the kind people who take the time to help us on here...love from Daisy

Notjustamum_2

Season ticket costs are not tax deductable but charitable donations are. My understanding was that the new rules only affect child benefit from January 2013 but that is only my understanding....

shop-to-drop

DitsyDaisy wrote: »

Sorry to crash the party, just looking for advice, my husband earns £63 k and I earn £7.5 k, we got the letter.
My husband pays in by salary sacrifice for a pension, he thinks its £10 k in total, he wonders if his rail season ticket costs are applicable for tax relief, he donates to charity by direct debit each month does this also come off the annual income total?
I was told today by the self assessment helpline that we would have to repay the child benefit received from April 2012 to April 2013 if we are over the 50k limit. This amounts to a repayment of £1441 for us ( 3 kids). Can anyone confirm or expand these queries for me? Never had to fill in tax forms before as PAYE, but husbands job subject to a reorganisation so I don't want to give up child benefit in case our circs change drastically in the near future... Many thanks to the kind people who take the time to help us on here...love from Daisy

I thought this was starting in Jan 13. Are you sure they will be wanting this financial year paid back I'm a bit shocked. Your husband will need to do a tax return charity donations definitely are exempt as are pension payments but don't know about travel card.