high income child benefit charge -letter

Bemma

MallyGirl said:

Every letter relating to child benefit explains about the salary cap and gives you the option to opt out of receiving the benefit. If they have come to your partner then either they haven't read them or they didn't understand your earning level. Neither is the fault of HMRC.
If your employer operates salary sacrifice, and the numbers work, then you can increase your pension payments to get back under the £50k.

I got hit with the HICBC a few years back and thought it was a terrible charge!  Retrospectively, it's the best thing that ever happened to me!  I realised I could salary sacrifice below £50k and keep it, I also did the sums on Tax and NI as well and couldn't believe how little of my £50k-£60k salary band I was getting net.  I'm now making substantially larger pension contributions than if it didn't exist.  I'd probably be sleeping along (like most people) with the default company contribution option without it!

bigfer

I always paid HICBC as I was the higher income earner, but as I paid into a private pension and did self assessments every year it was fine, as I managed to recover some of the CB. On the final year before I retired, my wife received an unexpected company bonus and for the first time in our marriage she became the higher income earner. We did not acknowledge the significance of this at the time as the bonus came some time later in the next tax year. She was PAYE and never was required to self assess and had no easy access to self assessment on her government gateway portal.
A couple of months ago she received a demand for the HICBC for the year in question which I had already paid. It took quite a few phone calls between HMRC and CB office to get to the bottom of what had happened. She was liable to repay the HICBC not me. I thought it would be easy for her to pay the difference, but no, sadly that is beyond the wit of HMRC so she had to pay the full HICBC. I asked how my (now) over payment would be refunded and was told "that's a little bit tricky" as it was paid on an earlier tax year. I was told to write a letter (yes a letter in this day and age) pleading my case and was told to use the phrase "I believe the particulars given in the claim are correct and complete to the best of my knowledge and beliefs". I was advised the refund may take 10 weeks.
Moral of the story, just make sure the higher earner is paying the HICBC and double check because its a right chew on trying to correct it.
As an aside, the HMRC send me a letter (yes a letter again) telling me I have a tax rebate owed to me. I don't and will not be claiming it. I will wait until they send me the cheque before I inform them of their very basic error. No wonder so many people avoid paying tax when our system is so overly complicated. 

zagfles

If you weren't aware of this were you aware that prior to 2016 if you were a higher rate taxpayer you had to pay extra tax on any interest you earned? Something else they might chase you about if applicable. Same applies post 2016 but there's a £500 allowance before you have to pay.

daveyjp

Once you get to higher rate tax it is always worth doing a self assessment anyway, even if you are PAYE.

bigfer

zagfles thanks. yes i see on the calculation there is a line for untaxed interest, i assume that is something to do with it. as i said, i'll wait till i get my HICBC refund before i bother them again.
i have since retired and my DB pension is just under the personal allowance, so from now on until SP, the revenue can haunt someone else.

zagfles

bigfer said:

zagfles thanks. yes i see on the calculation there is a line for untaxed interest, i assume that is something to do with it. as i said, i'll wait till i get my HICBC refund before i bother them again.
i have since retired and my DB pension is just under the personal allowance, so from now on until SP, the revenue can haunt someone else.

Sorry my previous post was aimed at the OP rather than you...

[Deleted User]

bigfer said:

zagfles thanks. yes i see on the calculation there is a line for untaxed interest, i assume that is something to do with it. as i said, i'll wait till i get my HICBC refund before i bother them again.
i have since retired and my DB pension is just under the personal allowance, so from now on until SP, the revenue can haunt someone else.

 Your case sounds rather mad given you gad paid! Hope you get it back quickly 

dunstonh

f my wife wants to open a bank account I don't need to give permission circa 1900

It could also be argued that not sharing financial information is also circa 1900 in attitude as well.

if the hmrc had made me aware in 2013 or any point sense I would have gone down the extra pension root. 

The person receiving the child allowance is notified and it clearly states that it is household income.

 I ve gone back thru every letter sent to me by the hmrc and no mention of the charge. 

As you were not in receipt of the child allowance but your wife is.  The letters will be addressed to her.  

Pension provider also no mention,

It is nothing to do with them.

employer again nothing to say this charge will affect you and here's what you can do to mitigate the impact. 

Again, not their place to do it.

It is between you, your accountant or your IFA.   If you do not have an accountant (which is likely unless you are a business owner or self employed) or do not have an IFA, then you take on responsibility for knowing your tax affairs.

Instead 7 years have gone by and I ve got a 10 plus grand tax bill the same month I've been told that the likily hood is business closure next month due to the covid situation so not be in a job anyhow. 

As you run separate financials to your spouse, then you should be telling your wife to pay it as she has had all this money.

saver_ali

If you were thinking of cancelling the Child Benefit, it’s better to keep claiming it and pay the tax on it rather than stop claiming, because your wife will continue to get NI credits for any period she’s not working, which count towards her state pension. 

xylophone

I Recieve a yearly letter from the hmrc about the  tax paid by me no mention of the hicbc.

Have you read the links in my post on page 1 of this thread?