Paying Back Some Child Benefit

planemad

Dear All

Hopefully some tax wizard can help me with this:

I have just received my annual tax summary for year 14/15 which shows the following:

Taxable income of £51,854.61
Tax Free Amount of £10,000.00
Your Tax and NIC of £14,640.57
Your income after tax and NICs £37,214.04

I'm completely PAYE and have never done a tax return.
Researching the child benefit payback scheme I think I may owe the government some money soon by paying them back a percentage of our child benefit.

I'm married, my wife does not work but she claims the child benefit.
We have one child (3) but we had another child born in March 15 so we claimed for 1 child since 2012 and a 2nd child since March 15.

Would really appreciate some guidance if possible?

Thanks

jem16

planemad wrote: »

Researching the child benefit payback scheme I think I may owe the government some money soon by paying them back a percentage of our child benefit.

Do you pay into a pension scheme and are the contributions taken into account on your taxable income?

Spidernick

You owe back 18% of whatever you have received, as it's 1% for each complete £100 above £50,000. You should have registered for Self-Assessment by now, so I suggest you contact HMRC urgently around this and see if you can file electronically (you will need a Unique Taxpayer Reference) by 31 January 2016 and pay the tax then too.

You might want to consider starting/increasing pension contributions to bring your taxable salary under £50,000 (but you'd still need to file tax returns where the gross is over £50,000).

planemad

Spidernick wrote: »

You owe back 18% of whatever you have received, as it's 1% for each complete £100 above £50,000. You should have registered for Self-Assessment by now, so I suggest you contact HMRC urgently around this and see if you can file electronically (you will need a Unique Taxpayer Reference) by 31 January 2016 and pay the tax then too.

You might want to consider starting/increasing pension contributions to bring your taxable salary under £50,000 (but you'd still need to file tax returns where the gross is over £50,000).

Many Thanks for this -
I also get a company car so P11d but from March I will be getting a company car allowance of approx £6k - looks like I will be paying a lot more CB back. What an unfair tax!!

booksurr

planemad wrote: »

What an unfair tax!!

as it would appear you have been a higher rate taxpayer for at least sometime isn't it unfair that you presumably have not paid the extra tax you owe on your savings interest and any of taxable income you have not declared given you have never done a tax return before?

planemad

booksurr wrote: »

as it would appear you have been a higher rate taxpayer for at least sometime isn't it unfair that you presumably have not paid the extra tax you owe on your savings interest and any of taxable income you have not declared given you have never done a tax return before?

Unfair in that we choose for my wife to stay at home and bring up our children - another couple can both work and earn £49k each and not pay a penny back!

Don't have savings my friend - my wife has a nice bit herself which I top up monthly for her, which is very tax efficient seeing as she is not a tax payer.
No additional income either so why would I have registered for self assessment?

jem16

planemad wrote: »

Unfair in that we choose for my wife to stay at home and bring up our children - another couple can both work and earn £49k each and not pay a penny back!

You haven't answered the question as yet about pension contributions.

What matters most is your net adjusted income and not your gross income. If your gross income less pension contributions is less than £50k you won't have to pay anything back.

planemad

jem16 wrote: »

Do you pay into a pension scheme and are the contributions taken into account on your taxable income?

Hi

No I do not contribute to a pention, my firm do but not me.

jem16

planemad wrote: »

Hi

No I do not contribute to a pention, my firm do but not me.

Well do yourself a favour and contribute to one. If you contribute something to the works pension will they contribute more - ie matching?

If not then contribute to a PP. A gross contribution of £1855 - net of £1484 would let you keep all of your Child Benefit.

As a higher rate taxpayer you can then claim another 20% tax relief which is £371. So your contribution has only cost you £1113 and £1855 in your pension.

If your employer matches any contribution you make it will be even better.

How much Child Benefit do you get?

grey_gym_sock

jem16 wrote: »

As a higher rate taxpayer you can then claim another 20% tax relief which is £371. So your contribution has only cost you £1113 and £1855 in your pension.

and you also get to keep about £315 of child benefit that you'd otherwise have to pay back (because ISTR that with 2 children, what you get to keep is c. 17% of the gross pension contribution, so 17% of £1855).

so you get £1855 in a pension at a net cost to you of £798.

it's a complete no-brainer. it's too late for last tax year, but this year, put however much you need in pensions so that you adjusted income (i.e. after deducting gross pension contributions) is down to £50,000.

planemad

Problem is from March I will be getting another 6k car allowance.

Currently have a company car paying P11d approx 220 per month.