Child benefit - can they take this much tax???

xylophone

http://www.hmrc.gov.uk/adjustednetincome/

http://www.pruadviser.co.uk/content/support/technical_centre/child_benefit_trap/

http://www.aviva-for-advisers.co.uk/site/public/tech-centre/tech-article-detail/tax-planning-for-the-child-benefit-charge

The above might be worth a look.

Does your employer provide a pension scheme and contribute to it?

If so, it seems rather short sighted not to join?

Mumsiemoo

Thank you.
I can see why it would seem short sighted but we cannot afford it at the moment as paying nursery fees and moved house recently. Once our eldest gets his free 15 hours we will be in a better place.

zagfles

The way the child ben tax works is you pay back 1% of it for every £100 you earn over £50k. With 2 kids child ben will be £1770, so you pay £17.70 per £100 over £50k.

You can use pension contributions to reduce your income so every £100 you put into a pension you'll save £40 tax and £17.70 child ben.

The other thing is your fuel benefit is very high - do you do a lot of personal mileage? If not is it really worth paying tax (and losing child ben) on over £4k? If you only do say 10,000 personal miles it'd probably cost under £2k in petrol, which is less than the tax plus child ben charge on the fuel card.

Mumsiemoo

Thanks. My round trip to work is over 100 miles but in am speaking to my employer to see if I can stop this but become a home worker which will mean I can claim mileage.

Mumsiemoo

Regarding opting out of the £4557 fuel allowance.
If I remove that what will I get extra in my wages each month? I'm assuming I'll be taxed 40% on the extra in my wages so wondering if it's still worth doing?

Mumsiemoo

Would I still need to pay by child benefit? If so will it be less if I stop the fuel card?

Mumsiemoo

Sorry, being dumb... Why is my income less? I get the fuel card at the moment (which is included in my earning for the sake of child benefit) if I stop the fuel card I'll get that as extra money in my wages so would it not work out the same?