MSE News: Child benefit deadline for higher earners looms

sweaty_betty

Thank you - that's really helpful

Just one more question. Is it necessary to fill in a self-assessment to have pensions etc taken into account for child benefit? It's a bit of a headache and I think many would like to avoid it for as long as possible if they can!

wooders

I have 2 kids - but do not live at home - their mum claims child benefit and earns £35k

I live with my new patrner, she also has 2 kids that live with us - she claims child benefit she earns £25k

I earned 52k last year - I did a self assessment, got a letter saying thanks don't do one next year....

Q is... am I gunna get stung?

jamesd

sweaty_betty wrote: »

Just one more question. Is it necessary to fill in a self-assessment to have pensions etc taken into account for child benefit? It's a bit of a headache and I think many would like to avoid it for as long as possible if they can!

Not necessary. Just phone or write a letter to tell HMRC about the pension payments. They will adjust the tax code for the current year as well if using PAYE. If you phone you can also ask them to confirm your belief that the pension payments produce an adjusted income below £50,000 so there's no need to register for self-assessment. That question, if you also ask for a note to be made of it, also means you've told HMRC if you later have a problem with them.

eyeballi77

hey folks,

Has anyone read or know what the knock on effect to Child care vouchers would be if you have to pay back some or indeed all of the child benefit?

Naughty_Noonoo

Just discovered that 50,000 is not the actual limit before Child Benefit tax kicks in but it is 50,100. Obviously this does not make much of a difference unless you are very close to the threshold.

Agrajag

eyeballi77 wrote: »

hey folks,

Has anyone read or know what the knock on effect to Child care vouchers would be if you have to pay back some or indeed all of the child benefit?

As far as I know childcare vouchers are available independent of your income (bar the weird case of converting almost your entire income to them). The vouchers are available no matter what CB you get.

In fact the more vouchers you get, the less CB is clawed back because your salary (calculated AFTER voucher value) is lower.
This makes childcare vouchers an even better deal for those in marginal (£50-65K) cases.

buster001

I have just received a letter about my self assessment and child benefit charge and surprised what I have found.

firstly what you earn or what you think you earn can be different.

you may earn £48000 and think you are safe, not if you receive any benefit. for example if you have a company car which has a benefit in kind £3500 this is added to your amount and not taken off. (so I was told by the tax office) this also effects the amount of child benefit you have to pay back.

The general calculation is 1% for every £100 over the £50,000 limit
not in my case the car benefit has an extra charge, the amount I am expected to pay back is more than double the above calculation so I can be expect to pay the full amount back well before I reach the £60,000 limit depending on benefit you may receive another is health care this is also added (according to the tax).

Is there anybody who's knows this to be correct as the headlines I see, focus on £50,000-£60,000 limit.

Agrajag

See my note above "The amount used for the Child Benefit calculation is not you headline salary, it is your ‘adjusted net income’. This is (roughly) your pay, minus any (non-taxable) pension contributions, plus any benefits (car etc.)"

So yes, you car benefit gets added to your headline salary, along with other taxable benefits. But if you contribute to a pension, this is deducted.
The £50,00 to £60,000 IS the correct range, and you pay back 1% of your CB for every £100 of your adjusted net income above £50000
The reason the reporting is confusing is that no one wants to bother explaining 'adjusted net income'.

I have never heard of a car benefit incurring an 'extra' charge - can you elaborate? Exactly what have HMRC said? My reading of these things is that the taxable benefit adds as is (i.e. your £3500), not at some specially increased rate specifically for CB charge...

buster001

Thanks for your reply, I now have a better understanding of the calculation.

I was getting confused with what the tax office were telling me. When they said how the initial calculation is applied 1% of the amount over 50,000 I said what they had calculated did not match the amount I calculated and asked why.They said that because of the company car the amount was bigger at a rate of 53%. I since spoken to them to explain how.

The car benefit is added to salary then the 1% calculation is applied amounting to a 53% repayment.

With reference to my other point although my salary on the pay packet is less than 50,000 the car pushes it above, something I have not seen clearly mentioned in any headlines.

once again thanks for the reply.

Agrajag

Yes, that makes sense. And I see your point about the car charge being a surprise. It all comes down to simplistic reporting.