Child Benefit Rules

Erob83

Hello All

Wondering if anyone has been in the same situation as our family and found any help...

My husband has just entered the higher tax bracket for earnings and as we have four children and my salary was all going on childcare we have opted for me to SAHM with the children for the next couple of years until they are all school age.

We have now been contacted to say that my husband has to do a Self Assessment for tax as we are no lounger eligible for Child Benefit. Just wondered. This is right as we are now a one income family and effectively bringing in less income than when he was under the £50k bracket (our joint income would have been £67k)?

This makes no sense to me.

Thanks for any advice or help:)

Tigsteroonie

https://www.gov.uk/child-benefit

If you or your partner earn over £50,000

You may have to pay back some of your Child Benefit in tax if your (or your partner’s) individual income is over £50,000.

Also more info here:

https://www.gov.uk/child-benefit-tax-charge

sammyjammy

Sense it may not make however it is true. The Child benefit rules look at individuals salary because that's how the tax system works.

If you both earnt £49k then you would be entitled to the full Child Benefit.

It maybe that additional pension contributions might take him under the taxable income threshold?

hieveryone

Yes, the information they've sent is correct - and it's disgusting.

Two people can earn 49k (bringing in nearly 100k) and still receive it - one person earns 51k and it's gone (or more accurately, you pay some of it back - but the hassle makes it easier to opt out I felt).

Completely shocking system and in no way fair.

Flugelhorn

very frustrating - DH used to claim the child benefit anyway when I was higher rate tax payer and he wasn't earning - we put it in the savings account offsetting then mortgage and then I paid it back about 18 months later when sorting the tax bill.

Problem is that when you are in higher rate tax you stop being eligible for all sorts of things eg marriage allowance / CB etc - feels like an uphill struggle to earn just a bit more.

Dazed_and_confused

Two people can earn 49k (bringing in nearly 100k) and still receive it - one person earns 51k and it's gone (or more accurately, you pay some of it back - but the hassle makes it easier to opt out I felt).

That is simply untrue.

If one person has adjusted net income (High Income Child Benefit Charge isn't based on earnings or even taxable income) of £51k then they would pay 10% of the Child Benefit back.

If you (or partner) have really opted out for that reason you have either misunderstood how it works or have given up 90% of it for the sake of filling a few boxes in on a tax return.

Nowadays most people who "earn" £51k actually only get <£50k in taxable earnings anyway due to the proliferation of auto enrolment pension schemes.

TELLIT01

The law is quite simple. If one partner earns over the £50k limit, there is no entitlement to Child Benefit. Two partners both earning £49k continue to be eligible.
Sensible or otherwise doesn't come into it.

hieveryone

How is it untrue? If you earn £51k you start to pay the charge. Not everyone wants or knows how to do a tax return. The more you earn, the more you get charged.

Plus the pension contributions is only calculated from pay, not before tax contributions.

sheramber

Although you start to pay the charge when your adjusted net income is over £50.000 you only pay part of the child benefit back. It is an increasing scale and It is not until you are at £60,000 that you pay back the whole amount.

LilElvis

hieveryone wrote: »

How is it untrue? If you earn £51k you start to pay the charge. Not everyone wants or knows how to do a tax return. The more you earn, the more you get charged.

Plus the pension contributions is only calculated from pay, not before tax contributions.

Completing an online return is quick and very easy if the only thing you need to declare is the child benefit. All you need are your P60 (and P11D if issued) and follow the steps - no more than half an hour. Hardly very MSE to "throw away" money by declining the benefit simply because you're too lazy to look at completing a Self Assessment.

zagfles

LilElvis wrote: »

Completing an online return is quick and very easy if the only thing you need to declare is the child benefit. All you need are your P60 (and P11D if issued) and follow the steps - no more than half an hour. Hardly very MSE to "throw away" money by declining the benefit simply because you're too lazy to look at completing a Self Assessment.

You also need to declare interest (except ISA interest) even if within the tax free personal savings allowance, as this will count towards the "adjusted net income" used for child ben calculations.

You can also declare any gift aid contributions you made, you can often gift aid stuff like trips to the zoo, national trust properties, educational places like the national space centre etc. These will reduce your ANI