50k Child Benefit tax threshold - help needed

SavingforFlorida

Hi everyone.

Mu husband and I have three children and claim Child Benefit. My husband is a teacher and has been earning around £48k for the last few years but a year ago he changed jobs and his gross salary is now £51k.

We realise that this means that we would need to complete a Self Assessment if we continue to claim Child Benefit, so we registered for Self Assessment.

HOWEVER... and this is where I need help. We've just dug out his P60 from April and in the box that says "total for the year" it has a figure of approx £45k. The "missing" 6k are his pension contributions.

Am I right in thinking he doesn't need to complete a self assessment as, according to his P60, he only earned £45k last year?

Alice_Holt

See: https://www.theguardian.com/money/2013/sep/28/child-benefit-pension-contributions-higher-earners
https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/reduce-high-income-child-benefit-charge/#

"But there are likely to be quite a number of parents earning more than this – perhaps £53,000 or £54,000 – who, unbeknown to them, can continue to claim child benefit without having it clawed back later.

That's because they don't realise that, for the purposes of this new regime, they can deduct the money they contribute to their pension from their headline salary. In many cases this will be several thousand pounds per year – which may be enough to take them below the vital £50,000 threshold.."

You shouldn't be subject to the high income child benefit charge.
Whether you need to complete a SA form, now you are registered is a different matter.

resilie

As adjusted income is below 50k you don't need to pay back any CB. I would call HMRC about the fact that you registered for SA in error and see if they can "de-register" you... if they can't it should still be pretty straightforward for a PAYE employee

Dazed_and_confused

"salary" is irrelevant for the purposes of tax and the High Income Child Benefit Charge.

It is taxable pay that matters for tax and that is shown on the P60.

Is it quite normal to have a "salary" of say £51k but only have taxable pay of £46k because pension contributions to an employers pension scheme are deducted from pay before tax is calculated.

As far as the High Income Child Benefit Charge is concerned it is "adjusted net income" which is used to determine any charge payable and you need to consider the P60 figure and any other taxable income such as employer benefits and taxable savings interest. And there may be other things which can be deducted

If you Google "adjusted net income" there is more information on gov.uk about how this is calculated.

Nathaniel_Essex

I have a question on this.

I need child benefit but have no idea what my earnings are going to be. I have a basic of £45,000 and a bonus potential of £6,000 plus other bonuses that may come my way. Now, if I accept child benefit, there is a good chance that my earning will be below the £50k mark but there is a chance, literally in the last month of the financial year, that I could go over. What does someone in my position do?

Darksparkle

Nathaniel_Essex wrote: »

I have a question on this.

I need child benefit but have no idea what my earnings are going to be. I have a basic of £45,000 and a bonus potential of £6,000 plus other bonuses that may come my way. Now, if I accept child benefit, there is a good chance that my earning will be below the £50k mark but there is a chance, literally in the last month of the financial year, that I could go over. What does someone in my position do?

Take steps to reduce your adjusted net income below £50k or if over £50k then complete self assessment and repay what you need to. Child benefit doesn't stop completely until over £60k

xylophone

Pension contributions?

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/reduce-high-income-child-benefit-charge/