Child Benefit Tax Deduction - Over charged?!?

piratematt

Hello,

I earn over £60,000 so I fully understand the child benefit my wife receives is 100% repayable through my tax.

We have one child (age 5)

What I cannot understand is the actual deduction on my tax code for this year, and the new one I have for next year

For 2018/2019 it was £2,610
For 2019/2020 it is going to be £2,583

Surely for both years it should be a deduction of a single child. For 2019/2020 that should be £1,076.40

My tax code for this year is 987L - partly due to a £50 deduction for medical insurance, but mostly down to a massive hit on child benefit again.

Is this because they need to set it higher to claim the net difference back, or am I being overcharged for children I don't have!?

possle

Me and work friends are just going over this (first I've heard of it)

There understanding is you have do a self assessment and pay then what you owe rather than than paying more tax throughout the next year.

Two of the lads have just had fines from our lovely and helpful HMRC of figures of £2500 and £3500

I've now been over 50k the last two years and feel as i'm going to get bitten soon with a nice fine.

Did you receive letter in regards to the change?

A massive penalty again for the working people.

Dean000000

I don’t think they are charging you 2k, they are reducing the amount you can earn tax free, by 2k,

Meaning in reality you are paying tax on 2k more, or, 40% of the 2k..

I think that’s how it works anyway

xylophone

Had you considered increasing your pension contributions?

See https://adviser.royallondon.com/technical-central/pensions/state-benefits-pension-manuals/child-benefit-avoiding-the-tax-charge/

Dazed_and_confused

Dean000000 is along the right lines.

On your level of income a deduction of £2,583 in your tax code will usually mean that additional tax of £1033.20 will be deducted by your employer (£2,583 x 40% = £1033.20).

This will show up as extra tax on your P60 so when you complete your Self Assessment return and establish the actual High Income Child Benefit Charge
payable you will have paid more tax than normal so the extra payable through Self Assessment is minimised.

It sounds as though the deduction needs to be slightly more if you want it to collect £1076.40 but it is all just provisional anyway, it is your Self Assessment return which ultimately counts, this is just helping you avoid a large bill when you file your return.