Child Benefit tax issue

sammyjammy

This one is for my sister, she is driving me crazy panicking about this

She lives as a lodger in the house of a friend, friend has a son and receives CB for him. My sister earns over £50k p.a. and is convinced she has to do a self assessment and they will make her pay additional tax for her friends CB. She did have a letter about it last year but I convinced her to ignore it.

If she doesn't register and does nothing about it what will happen? Will HMRC assume she is eligible for this tax and fine her or should she contact them (as I have suggested to explain why it doesn't apply to her?

Grateful for any help.

Sam

ETA: this is the bit she is convinced applies to her "someone else gets Child Benefit for a child living with you and they contribute at least an equal amount towards the child’s upkeep" my understanding is this is where a couple are separated and the other parent claims the CB?

Spendless

No she won't. Not unless she is really the live-in partner of the person who has a child. If she genuinely is a lodger then there's no issue.

danielanthony

She should contact HMRC to get guidance as they'll probably compare her tax records to the records held by DSS, get a address match and conclude that CB should be withdrawn. Better to deal with it now rather than when £10,000+ is owed.

It might be difficult for her to prove that she's just a lodger living with a man and his son when earning more than enough to get her own place. But that's the game unfortunately, claim benefits and dance to the government's tune!

BTW, I have worked hard and so earn the amount deemed to mean that I get nothing in CB for my kids, so I called HMRC and they registered that I had contacted them and stopped the CB payments to my wife so that I would not need to do self-assessment. Completely crazy situation as although I earn a lot compared to someone living in Manchester, I have to live near London for my job where even a six figure salary doesn't go far!

sammyjammy

danielanthony wrote: »

She should contact HMRC to get guidance as they'll probably compare her tax records to the records held by DSS, get a address match and conclude that CB should be withdrawn. Better to deal with it now rather than when £10,000+ is owed.

It might be difficult for her to prove that she's just a lodger living with a man and his son when earning more than enough to get her own place. But that's the game unfortunately, claim benefits and dance to the government's tune!

Thanks for the advice, apologies if I didn't make it clear, the friend is a woman. They work together and my sister chooses not to have her own place, she likes the company.

I'll get her to ring HMRC just to make sure it doesn't come back to haunt her but even if it did I am sure she doesn't owe them a penny.

Icequeen99

The HMRC wording is misleading by referring to 'living with'.

Firstly, the charge only affects couples who are defined as people who are married or civil partners or those living together as husband and wife or civil partners.

So your Sister doesn't fall into this definition.

But there is no 'living' with requirement in the legislation for married couples, so even if you don't live in the same house if you are married then you are a couple for this purpose. HMRC wording doesn't make that clear.

IQ

xylophone

She did have a letter about it last year but I convinced her to ignore it.

Ice Queen is no doubt correct in the situation described - nevertheless, in view of quote above, the sister should write to HMRC ( or at the very least phone) and clarify the situation for the avoidance of doubt?

It is never a good idea to "ignore" communications from HMRC?

cattermole

I'm mystified as to why she would have had communications from the HMRC in the first place to be honest.

The friend she lives with is a single parent with a child and NO partner from your post.

The friend can let a room to a lodger and be exempt from tax on it up to £4250 (not sure of exact figure of the top of my head) although this would count as income for child tax credits and towards her own assessment for CB.

Your sister has no connection with the friend other than being a lodger. So I remain bemused as to why the HMRC contacted her in the first place?! Who gave them her details?! Although I agree ignoring is not the best way forward.

cattermole

Thanks BB's I did wonder. Good to know they are getting better at these things.

So a letter needs to be written then to conclude this thread stating apologies for not replying last year as they didn't understand why it was anything to do with them, clearly laying out what the situation is, should resolve the matter once and for all?

princessdon

She doesn't need to do anything. It's a standard letter everyone earning over £50,000 received. My father received one, my aunt (no children), many colleagues of my husband who have no children received it.

She hasn't ever claimed CB, nor have her household.

cattermole

princessdon wrote: »

She doesn't need to do anything. It's a standard letter everyone earning over £50,000 received. My father received one, my aunt (no children), many colleagues of my husband who have no children received it.

She hasn't ever claimed CB, nor have her household.

So it's a circular to everyone who is earning over 50k in case it applies to them?

I had my doubts about them searching and linking addresses on mass to do with children.

Glad you have clarified it. Seems a bit of waste of paper though and postage!

xylophone

She doesn't need to do anything. It's a standard letter everyone earning over £50,000 received. My father received one, my aunt (no children), many colleagues of my husband who have no children received it.

She hasn't ever claimed CB, nor have her household.

I have just found this http://www.hmrc.gov.uk/childbenefitcharge/faqs.pdf

"Q11: Why did I get a letter? Neither my partner nor I gets Child
Benefit and/or has a child living with us
A11: HMRC issued the letters after matching data on its systems. If there was any mismatch in the
data stored, you might have received a letter when you are not affected. You can ignore the letter
if you are not affected by the charge.

Nevertheless, I would be slightly concerned about "any mismatch in the
data stored" in this particular case where there are two people living together and one party is receiving CB.

It might be better simply to advise HMRC of the facts?