Child Benefit £50,099

Fennomenon

r6mile said:

Assuming you only have 1 job and simple financial affairs as you have described, for child benefit what is relevant is not your ‘salary’ as you might understand, but your in simple terms your salary minus pension contributions ie what’s in your P60. In your case that is below 50k so you don’t need to pay anything back.

Thank you! This is quite literally all I was after.

In the event that next April I am now above £50k, what should I do?

Dazed_and_C0nfused

Fennomenon said:

r6mile said:

Assuming you only have 1 job and simple financial affairs as you have described, for child benefit what is relevant is not your ‘salary’ as you might understand, but your in simple terms your salary minus pension contributions ie what’s in your P60. In your case that is below 50k so you don’t need to pay anything back.

Thank you! This is quite literally all I was after.

In the event that next April I am now above £50k, what should I do?

Calculate your adjusted net income and if that is £50,100 or more you have to register for Self Assessment and complete a tax return.

r6mile

I am a civil servant in a similar financial position, so this is familiar. Given how close you are to the threshold, I would assume that even a meagre pay award for 23/24 will take you over the £50,099 threshold post pension contribution (given this has been frozen).

Once you know what your pay award will be for 23/24, subtract the pension contributions and work out what your ANI is likely to be for the tax year. If it's above £50,099 (say, by £1,000), then you could put this amount into your pension. Easiest thing would be via your employers pension either by lump-sum or monthly payments over the year, or pay separately into a SIPP if you have one, if you run out of time for the former (though if you do it via a SIPP you will have to inform HMRC, get the extra tax refunded, etc. - it's a bit more faffy).

Keep in mind that you will be reaching into the 40% tax bracket that starts at £50,270 - combined with HICBC and national insurance, this makes your marginal tax rate 54% if you have 1 child, 63% if you have 2 children, 71% if you have 3 children (as I do!). So it's very tax efficient to put it into your pension. If your wife earns below the £12,570 personal allowance, this may also keep you in scope for the marriage allowance.

2childmum2

Also, even if you earn enough that you have to pay back all the child benefit (and assuming it is your wife who claims it and she is not working) don't stop claiming it, because by claiming your wife will be credited with NI contributions which will count towards her state pension (up until your youngest child is 12 I believe)

Robbie64

2childmum2 said:

Also, even if you earn enough that you have to pay back all the child benefit (and assuming it is your wife who claims it and she is not working) don't stop claiming it, because by claiming your wife will be credited with NI contributions which will count towards her state pension (up until your youngest child is 12 I believe)

I believe you can opt to claim Child Benefit but opt out of being paid it for the very reason you mention, to ensure that NI credits are paid.

calcotti

Robbie64 said:

I believe you can opt to claim Child Benefit but opt out of being paid it for the very reason you mention, to ensure that NI credits are paid.

Exactly so.