HMRC Child Benefit Debt - Time to Pay arrangement

Alocin86

Hi

I posted yesterday about how my husband and I don't discuss our individual earnings but after discussing buying a house we decided to look at our finances, which was when I discovered he has been earning over the £50k limit without me knowing and I've been claiming child benefit - which he didn't even realise I claimed and had no idea there would be an issue. (I was previously in a DV relationship where my ex controlled every aspect of my income and outgoings and left me with a lot of debt too, so when I met my husband I made it clear our finances were to remain separate. As long as the bills were paid, what we earned was our own business. We never imagined we'd end up in a position like this.  I claim the child benefit myself as I'm the one who buys the kids their clothes, shoes, activities, etc). 

He's not self-employed, so he has never had to submit a self-assessment.

We're still trying to get hold of self assessments so he can register, and we can submit self assessments for the last few years.   We only have his P60s up to 2019, and the child benefit department advised that we'd probably need to submit all the way back to 2013. 

We're expecting a pretty large bill that we'll have no way of paying without a Time to Pay arrangement.  I'm trying to calculate our affordability, but I'm unsure how HMRC will calculate it as my husband's earnings only go over £50k if he works a ridiculous amount of overtime? But the overtime is not guaranteed - some weeks he has no overtime whatsoever, others he could work 30-40hours overtime, it's so unpredictable.

I'm worried they'll take his earnings from his P60 statement as opposed to his flat weekly wage that he'd get if he doesn't work overtime.  

Does anyone know how they may calculate our income? 

Would they allow us to base a fixed repayment based on his flat wage with an agreed % deducted from any overtime paid?

I literally feel so ill with worry with all this 😩 even though he apparently earns over £50k, we certainly don't live an extravagant lifestyle, and with the rise in cost of living, our rent increasing and our Gas and Elec being triple what it was 12 months ago, we're only just able to pay the bills as it is.  Any extra he earns has been going towards paying debt off as we were hoping to start saving a deposit to buy a house - which was how all of this came about.

Icequeen1

It will be his adjusted net income for the year - the starting point will be his taxable P60 figure less certain deductions see https://www.gov.uk/guidance/adjusted-net-income. They won't look at his flat wage - it is his actual income for the tax year that is relevant. 

You may also have penalties to pay on top of that 

HillStreetBlues

Personally I can't see them basing it on flat weekly wage.
As you said he is doing lots of overtime  to get more than the £50k.
But as that has been going on over a very long period, I can't see them accepting that the overtime will stop being offerer.

Even if he stopped doing overtime now,  they might look at it that as trying to get the overpayments reduced.

Maybe if your husband got a letter from his boss stating that overtime was not being offered , that might help.

Alocin86

@HillStreetBlues - Thank you.

The problem we have is that it's not guaranteed.  He works in Fabrication so it's literally if a big job comes in or he has to cover sick. If the industry is quiet or the company loses a contract, the overtime dries up. 

He's not had overtime for the last 4 weeks and unless he gets called out, he's unlikely to do any overtime this week either - so any assessments made based on last year's earnings would be unaffordable for us right now. 😟

I'm sure his employer would write a letter confirming that overtime is based on the workload and is not guaranteed along with confirming his weekly wage.

HillStreetBlues

Is it much over the £50k?

Spendless

Is it over £60K he's earned when you're no longer eligible to receive child benefit and you will have to pay the whole amount back or more than £50K less than 60K when you can keep some of it. 

Dazed_and_C0nfused

@Alocin86

A very important factor for a lot of people with HICBC is pension contributions.

There is absolutely nothing which can be done retrospectively but understanding the method used to contribute to his pension is crucial here.

Some people use the net pay or salary sacrifice method and this is incredibly simple, you totally ignore them for Self Assessment and HICBC purposes.

For example salary £60,000 with 10% pension under net pay or salary sacrifice means taxable pay is only £54,000 (P60 pay figure).

The salary and those pension contributions never get entered on a tax return, it's the £54,000 which is included and is the starting point for HICBC purposes.

But if contributes using relief at source (RAS) it's a whole different kettle of fish.  Using the example above his taxable pay would be £60,000 and the RAS contributions don't reduce this but they get deducted when calculating adjusted net income, which is what HICBC is based on.  And there could be some higher rate tax relief due as well in that scenario as the pension company only ever adds basic rate tax relief.

All of that comes out in the wash when completing a Self Assessment return.

The key thing is to establish which method he used to get the money into his pension.

sheramber

You can used the calculator here  https://www.gov.uk/child-benefit-tax-calculator

When  working out his income for previous years it is the amount he earned. if that included overtime then that is part of his income.

If you do not have his P60's for all years HMRC can send him his pay and tax details for the missing years.

For information on Time to Pay  see  https://www.gov.uk/guidance/find-out-how-to-pay-a-debt-to-hmrc-with-a-time-to-pay-arrangement

You also need to consider going forward.

If his income is variable you might consider putting the child benefit away in a separate account until you know whether his income is going to go over £50k. That way you will have the money to pay it all or part of it back , if necessary.