High Income Child Benefit Charge

davep12345

All,

My wife has received a letter about High Income Child Benefit Charge, as she earns over £50K
& that she will need to register for Self Assessment.

I earn less than £50K so is there anything to stop me being the registered parent for child benefit.
To stop the charge applying to my wife ??

Also it seems an odd solution from HMRC to use self assessment, to recoup this tax if applicable, as I though that SA was all about declaring income.

Thanks

Mrs_Soup

davep12345 wrote: »

All,

My wife has received a letter about High Income Child Benefit Charge, as she earns over £50K
& that she will need to register for Self Assessment.

I earn less than £50K so is there anything to stop me being the registered parent for child benefit.
To stop the charge applying to my wife ??


Also it seems an odd solution from HMRC to use self assessment, to recoup this tax if applicable, as I though that SA was all about declaring income.

Thanks

Yes there is as you would still not be eligible for it as you are a couple. I earn barely 15K and am the registered parent for child benefit but as my husband is a higher rate tax payer we are not entitled to claim it. We did claim and repay it through his tax code for a while but now have stopped the claim altogether. the irony is that if you both earn 49K = 98 total you still get the benefit but if you have one person on 60K and one on nothing = 60K total you don't get it. I don't mind means testing or not getting it but it is irksome when couples with way more income than we have are still receiving it.

YBR

The charge applies to her regardless of which parent claims CB.

I have a non-working Spouse, so CB is in their name for NI reasons. I earn over £50K and have to self-assess for CB-chargeback.
Remember that there are some things that reduce the effective income chargeback is calculated on. The ones I know are Gift-Aided giving and Pensions, but look it up.

LilElvis

YBR wrote: »

The charge applies to her regardless of which parent claims CB.

I have a non-working Spouse, so CB is in their name for NI reasons. I earn over £50K and have to self-assess for CB-chargeback.
Remember that there are some things that reduce the effective income chargeback is calculated on. The ones I know are Gift-Aided giving and Pensions, but look it up.

Whether child benefit needs to be repaid is based on taxable income, so whilst pension contributions and charitable giving can reduce the potential liability taxable benefits from an employer can increase it - e.g. company cars, private medical insurance, private fuel benefit.I

Whilst your wife has only just received the letter from HMRC if her adjusted taxable income in previous years has exceeded £50k then she would have a liability for those years too - along with the possibility of penalties for not submitting self assessment returns and paying the liabilities when they were due.

davep12345

This is the first letter received from HMRC to my wife & the letter refers to 2018/19 only.

I've just checked & my wife earns over £60k
then I found this
https://www.moneyadviceservice.org.uk/en/articles/changes-to-child-benefit-from-2013#either-you-or-your-partner-earns-more-than-%C2%A360000-per-year

So it seems to me unless I am missing something.
My wife can still receive CB but whatever is received, the same amount has to be paid back as Tax.

Which to me begs the question, whats the point ? given by 1 hand then taken from another

calcotti

davep12345 wrote: »

Which to me begs the question, whats the point ? given by 1 hand then taken from another

The 'point'of claiming Child Benefit in this situation is that if one member of the couple is not working, or not working enough, they will not be getting NI credits towards their state pension from work. Someone receiving Child Benefit for a child under 12 gets NI credits so claiming Child Benefit and either choosing not to be paid it, or having partner pay it back, is worthwhile. Nonetheless it is, in my opinion, one of the more stupid Osborne policies.

LilElvis

davep12345 wrote: »

This is the first letter received from HMRC to my wife & the letter refers to 2018/19 only.

The letter might refer only to the one tax year but she is the one with the obligation to complete a self assessment return if out is required. If her taxable income exceeded £50k in earlier tax years then it would be prudent to admit to that now, and complete returns for those years too, as this would count in her favour when they consider levying penalties.

She will need to complete her self assessment for 18/19 imminently and will need to do so online as the deadline for paper submission has passed. If she hasn't already got an online tax account she needs to apply for a pass code now as this can take a couple of weeks. If she completes it by 30 December, and owes less than £3,000 for the year, she can apply to repay via adjustment to her tax code for the next tax year, otherwise she will need to submit and pay by 31 January. The amount she owes is £1,076 for the first child a further £712 for each additional child.

Dazed_and_confused

Also it seems an odd solution from HMRC to use self assessment, to recoup this tax if applicable, as I though that SA was all about declaring income.

Self Assessment is the only mechanism that HMRC use to determine what HICBC is payable.

Whether child benefit needs to be repaid is based on taxable income

Taxable income isn't used for this. It is adjusted net income which is totally different calculation. If it was taxable income that would mean things like gift aid and certain pension contributions wouldn't be of any benefit for HICBC purposes.

along with the possibility of penalties for not submitting self assessment returns

If a Self Assessment return hasn't been issued then there can be no penalty for failing to file one. If a return is issued now then there is always 3 months for it to be completed and filed before late filing penalties would be imposed.

Interest would still be payable on anything paid after the normal due date for payment though.

Which to me begs the question, whats the point ? given by 1 hand then taken from another

For some there is no point but others see a (small) money making opportunity. For example if we take the current tax year as an example the first Child Benefit payment would have been paid in April 2019. If the Self Assessment return for 2019:20 is filed by 30 December 2020 and the amount owed is less than £3,000 then it is possible for the amount owed to be collected via the 2021:22 tax code. Which means the money to be paid back is paid off by the final payday in late March or early April 2022. Nearly 3 years after the first payment was received. Low interest rates don't make stuffing the Child Benefit in a bank account that attractive but some people will see the (small) profit to be made.

ChopperST

If your wife is a higher rate tax payer then opening a SIPP and using extra contributions is a no brainier to keen the child benefit and effective tax relief of 40%

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