High Income Child Benefit Charge

sheramber

brianfly wrote: »

So you can't provide a clear explanation. Thanks for your worthwhile input.

BTW its a charge, not a tax. You may like to remember that before posting sanctimonious replies that offer nothing.

It is a tax charge https://www.gov.uk/child-benefit-tax-charge
You may have to pay a tax charge, known as the ‘High Income Child Benefit Charge’, if you have an individual income over £50,000 and either:

xylophone

http://paullewismoney.blogspot.com/2012/11/child-benefit-high-income-charge.html

The rules are complicated and may seem illogical and unfair.


I think I'd change that to "are" illogical and unfair and indeed (although personally unaffected by the legislation), I did write to my MP to express my view, pointing out that other means tested benefits are based on household income - many other people no doubt did the same and received replies trotting out the party line.


As for it not applying to you at the time, legislation is like that - at a certain point you don't drive a car/rent out a house/ have any capital gains etc so the rules pass you by like the idle wind you regard not.... but when you do, it is up to you to check on your position vis a vis those rules.

Dazed_and_confused

Brianfly

The letter I received was pretty fair and stated that I may not be charged penalties etc and i have no issue with paying back the money if we are not entitled to it, however I just wanted to understand the process for repayment that others have followed. I also understand that this isn't a 'tax', however I am PAYE so can this be repaid using tax code re-calculation? We are talking upwards to £5.5-£6k once all the years are calculated and that is simply not an amount of money we just have lying around, its not like we have been hoarding the CB money and accruing all the interest

In this situation paying it back through a lower tax code isnt going to be an option but if you file your 2017:18 Self Assessment return by no later than 30:12:2018 then it may be possible for your total self assessment liability for 2017:18 (which includes the High Income Child Benefit Charge for that year) to be collected through your 2019:20 tax code.

You would also have to owe less than £3,000 for 2017:18 for this to be possible.

badmemory

It may be unfair, well not may it obviously is, but it is the tax law unfortunately. Do we really want to go back to the time when a woman's earnings could push her spouse into another taxation bracket? Although I did enjoy my ex's £1000 tax bill caused by my self employed (& obviously meaningless pin money income). Didn't enjoy the non-payment of child maintenance to compensate much though but every upside has its downside. I counted it a win.

stevedresden

I just got off the phone to the HI-CBC advisor at HMRC and all I can say to anyone in the same position as those of us receiving the letter is - ring them, be polite and make it clear that you knew nothing about the charge, but that you want to sort the situation out



The guy was really helpful and explained everything in very simple terms. We didn't discuss the "fairness" - it's clearly a hugely flawed plan, but it is what it is and there is no option not to pay (unless you enjoy prison food !)


What he told me is of interest, so I will repeat it here
SEPTEMBER 2018


There are tens of thousands of people in this daft situation where they were not impacted in 2013 when the rule came in (because they either didn't have kids or were earning under the threshold) - and now don't realise that they owe this money back to HMRC because their situation changed.


The purpose of the latest batch of letters is to try and deal with that situation in the most straight-forward manner that doesn't involve any kind of legal threat or challenge and maximises the tax take for HMRC



Basically they are NO LONGER imposing penalties on any charges from previous years if you are honest and say you had no idea about the ruling or that you owed the money. That's great news for me, as the penalty was the bit I was worried about (normally 20%)


I feel a bit sorry for anyone who has already paid up in the past and also been charged the penalty, but going forward it looks like the government have realised it's not helpful to impose the penalty and get caught up in legal wrangles. Scrap the penalties and let people just settle up. (essentially a penalty amnesty in place, so now is your chance)

If you owe a lot for the tax years 2013-2017 then you have the option of setting up a payment plan. That involves paying a deposit and then monthly payments thereafter. I don't know the terms as I'm not at that stage yet (you have to wait for the bill to arrive before you negotiate that - but it's an option on the phone line to talk to a separate advisor)


If you owe for the 2018 tax year, then they will register you for self-assessment and you have to complete that before the deadline in Jan 2019 and then they will alter your tax code going forward until you have paid off the charge for that year via PAYE


Bottom line is that no one should be looking at a massive one-time payment if they simply don't have the money to hand. They want to help you manage the debt



You only have to self-assess in future tax years if your P60 shows £50k+ of taxable income. If you earn less (as I will in 2019) then you don't have to self-assess that year

dori2o

stevedresden wrote: »

I just got off the phone to the HI-CBC advisor at HMRC and all I can say to anyone in the same position as those of us receiving the letter is - ring them, be polite and make it clear that you knew nothing about the charge, but that you want to sort the situation out



The guy was really helpful and explained everything in very simple terms. We didn't discuss the "fairness" - it's clearly a hugely flawed plan, but it is what it is and there is no option not to pay (unless you enjoy prison food !)


What he told me is of interest, so I will repeat it here
SEPTEMBER 2018


There are tens of thousands of people in this daft situation where they were not impacted in 2013 when the rule came in (because they either didn't have kids or were earning under the threshold) - and now don't realise that they owe this money back to HMRC because their situation changed.


The purpose of the latest batch of letters is to try and deal with that situation in the most straight-forward manner that doesn't involve any kind of legal threat or challenge and maximises the tax take for HMRC



Basically they are NO LONGER imposing penalties on any charges from previous years if you are honest and say you had no idea about the ruling or that you owed the money. That's great news for me, as the penalty was the bit I was worried about (normally 20%)


I feel a bit sorry for anyone who has already paid up in the past and also been charged the penalty, but going forward it looks like the government have realised it's not helpful to impose the penalty and get caught up in legal wrangles. Scrap the penalties and let people just settle up. (essentially a penalty amnesty in place, so now is your chance)

If you owe a lot for the tax years 2013-2017 then you have the option of setting up a payment plan. That involves paying a deposit and then monthly payments thereafter. I don't know the terms as I'm not at that stage yet (you have to wait for the bill to arrive before you negotiate that - but it's an option on the phone line to talk to a separate advisor)


If you owe for the 2018 tax year, then they will register you for self-assessment and you have to complete that before the deadline in Jan 2019 and then they will alter your tax code going forward until you have paid off the charge for that year via PAYE


Bottom line is that no one should be looking at a massive one-time payment if they simply don't have the money to hand. They want to help you manage the debt



You only have to self-assess in future tax years if your P60 shows £50k+ of taxable income. If you earn less (as I will in 2019) then you don't have to self-assess that year

That's not quite correct for all cases.

If all you have is a basic salary then yes, just check the income on the P60.

If you also have Employer Benefits/Benefits In Kind (company car/medical insurance etc) then it's the total of the income on your P60 plus the total value of your benefits in kind.

Furthermore, if you have other taxable income then you also need to add this income as well.

Dazed_and_confused

And filing the return after 30 December will prevent any HICBC (or other tax) due for 2017:18 from being collected via the PAYE tax code.

dori2o

Dazed_and_confused wrote: »

And filing the return after 30 December will prevent any HICBC (or other tax) due for 2017:18 from being collected via the PAYE tax code.

Missed that bit. Quite right.

stevedresden

stevedresden wrote: »

If you owe a lot for the tax years 2013-2017 then you have the option of setting up a payment plan. That involves paying a deposit and then monthly payments thereafter. I don't know the terms as I'm not at that stage yet (you have to wait for the bill to arrive before you negotiate that - but it's an option on the phone line to talk to a separate advisor)

Thanks for the minor corrections to my post above - all valid and true. I just wanted to address this bit in the quote now, as I have just got past that stage


As the first advisor I spoke to on the HICB helpline was so friendly and sympathetic, I thought I'd explore the options on the payment plan


The HIBC helpline has an option 2 to discuss setting one up. So I chose option 2, but what's this? It's just a recorded message telling you to call the regular "having trouble paying your tax" helpline.


So I dutifully called them and found myself talking to an incredibly rude and aggressive operator who talked to me like I was a criminal, and just kept saying that I should pay all the tax that I owe immediately!


I calmly explained the situation and how the HIBC guy had been really helpful and suggested that, in the circumstances all of us who have been hit with this tax charge out of the blue, could arrange a payment plan - so she asked how many months I wanted to pay it off over. I asked what the options were and she got aggressive again and said 2 months! I suggested 4 months and she said no more than 3 months!


What happened next was she took my UTR and couldn't find me on the system. SO she then took my NI number and found me. She read back to me the UTR and it was IDENTICAL to the one I gave her. She seemed confused and said the "system was playing up"


She then told me my payment was overdue. I was logged on to my Gov Gateway account so I could clearly see that it said my payment was due by 12th October, so I asked her why she was making things up. She apologised and admitted that she couldn't see the due date so she assumed it was overdue?!


She then tried to set up a direct debit for 3 months but when she read the figure out it didn't add up and was about £200 higher than the figure on my Gov Gateway account and my paper statement. I said she had the figure wrong and she said it was because she was adding interest?! NB the paper statement already had the interest up to Sep 12th and said no more interest was due until Oct 12th. I pointed this out and she got aggressive again, so at that point I told her to stop the call and that I'd ring back and speak to a different adviser as I had no confidence that she knew what she was doing.


So beware if you go down this route!

dragback

I keep on hearing about all this publicity. When it was introduced I had no children and was earning below the 50k PAYE. When I had my first child I was earning under 50k but a bonus was tipping it over. I was in blissful ignorance. It is my wife who is claiming and she does not know the ins and outs of my salary and how this combines with a bonus. She would not have claimed in the first place if we knew about the tax.


I found out by recieving a letter two years after going over the threshold.... why not sooner? To be fair I did speak to a really nice chap who completely understood and was very helpful. The more of my friends I speak to the more I realise there is a massive information gap out there - we are all financially savvy and law abiding - for those who say 'it's your job to be aware of the tax rules'.... I can understand that position if you are aware and then choose to ignore but there needs to be something to raise awarness after you have filled in some forms years ago when circumstances were different and you actually have a life to live.


To then suddenly make you aware of all this and then say you have to pay X amount within a month is pretty unflexible in my opinion. If there is tax to pay, I pay it. Just not at once.