just over 51k claiming CTB, with a bonus to be paid in February, should i stop CTB

pete1975

My salary is 43.5k and with taxable benefits its just over 51k.    my wife doesn't work and we claim child tax benefits for 2 children as our third child the payments stopped when she went to Uni in September. 

We have been told at work that as the year has been good that they are trying to sort out a bonus for everyone and my boss said it will be around the 5-6k mark before tax which will be paid in February 

with a 5 or 6k bonus that will mean that we have to pay the near enough the whole of the child benefit back at self assessment time.   
is there any benefit of me cancelling the child benefit with HRMC now before the bonus arrives as i will still have to complete the self assessment for 20/21 tax year and would i only declare the child benefit upto January and therefore its based on my wage upto that point or even though i cancel it in January it will take in consideration the bonus in February?

Grumpy_chap

Can you make extra pension contributions to reduce the effective income and avoid the hit on CB?

Dazed_and_C0nfused

Can't see why you would want to stop it as there is clearly no certainty that 100% would have to be repaid.

And it seems you will be completing a Self Assessment return anyway so you only seem to be adding complexity by stopping it.  And then having to think about restarting it.

As already said additional pension contributions can be very tax efficient in this situation, particularly where you aren't already over the £60k ANI limit.

Grumpy_chap

As your wife is not working, are you transferring the small amount of marriage allowance?  Assuming that you qualify in other respects.

pete1975

thanks all,  im already contributing 21k to my pension to get my salary to 43.5k.  its my taxable benefits such as healthcare as there are 5 of us which is expensive.    in the past i've always added the bonus to my pension when we get one,  but was thinking about it last night and could we use the money this year for driving lessons and some money for my daughters first car    

[Deleted User]

I am confused as to the completion of the 20/21 tax return and declaring child benefit up to January as we are talking about a bonus received in this tax year - 2021/22. Is there some confusion with the tax years?

pete1975

[Deleted User] said:

I am confused as to the completion of the 20/21 tax return and declaring child benefit up to January as we are talking about a bonus received in this tax year - 2021/22. Is there some confusion with the tax years?

sorry yes that me,   i did indeed mean its tax year 2021/22 a

p00hsticks

As your wife isn't working then hopefully the Child Benefit is in her name. Even if you decide not to take (or have to repay) the Benefit, then you should ensure that she continues to obtain the accompanying NI credits (assuming at least one of the children is under 12) to build up her State Pension entitlement.

pjread

for what it's worth, IMO there's no harm in leaving the claim open - it ensures NI credits as p00hsticks says, and there's no harm piling it up during the year and repaying if need be. 

If there are 5 of you, I assume that means 3 kids worth of child benefit?  Bear in mind that means between 50-60k your marginal tax rate including NI and child benefit charge would be over 67%(!).  Personally I'd rather 10k in my pension than 3k in my bank account unless you're desperate for the cash. 

[edit] re-read, 2 kids child benefit - so a 'mere' 60% marginal rate.  I'd still make the same decision [/edit]