Very confused over High Income Child Benefit Charge

sky_rat

I have been receiving child benefit since 5th September 2022 and I'm trying to find out if I have to pay the high income child benefit tax charge, but it's very confusing.  

I rang HMRC for help, but it took nearly an hour to get through and the woman dealing with my call didn't seem to have a clue.  Plus her system kept crashing and then the call got disconnected.  I gave her my number and asked her to call me back in case we got disconnected, but she never did.

I've never had to do a self assessment tax form before, I dont if I'm supposed to pay tax on the child benefit and if so when, how much and the procedure to do so.

The government website says:

1 - "You may have to pay the High Income Child Benefit Charge if you or your partner have an individual income that’s over £50,000"... but it doesnt state whether this is before or after tax ?

2 - "If your adjusted net income is over £50,000"... here it states net income (so presumably after tax?) but I dont know what it means by 'adjusted net income' ?  I have a company pension where I pay 3% and the company pays 5%.  Does the pension need to be subtracted from the net income ?

3 - "If you do not usually send a tax return, you need to register by 5 October following the tax year you need to pay the tax charge"... I registered for a self assesment tax form yesterday just in case. 

When I use the child benefit tax calculator there are some questions I don't know:

1 - "Which tax year are you claiming for?"... should it be 2022 to 2023, or 2023 to 2024 ?

2 - "Are you claiming for only a part of the tax year for any of your children?"... should this be yes or no ?

I don't want to be fined for not paying the correct tax, but I dont know if, how and when it needs to be paid.

I'm worried that I might have to pay all the benefits back (which in total would be £1,275.80 to date) and I haven't accounted for this.  I thought at the very worse the tax might be 50%, but not 100% !?

The decision to pay child benefit wasn't made until 2nd January 2023, so the first payment was backdated to September 5th 2022.

The letter from HMRC said that I am enititled to receive £21.80 a week.

The child benefit payments I have recieved so far are:

05/01/23: £348.80 (backdated payment)

16/01/23: £87.20

13/02/23: £87.20

06/03/23: £87.20

06/04/23: £89.40

05/05/23: £96.00

05/06/23: £96.00

03/07/23: £96.00

31/07/23: £96.00

25/08/23: £96.00

25/09/23: £96.00

Spoonie_Turtle

I'm sorry I don't know any of the answers but I believe you only have to pay 100% of the child benefit back if your adjusted net income hits c.£60,000.

MDMD

Adjusted Net income is income before tax, but is net of certain deductions such as pension contributions 

https://www.gov.uk/guidance/adjusted-net-income

sheramber

Adjusted net income is not the same as net income. 

Are your pension payments already deducted on your P60?
If they are then they are already deducted and are not deducted again.

Do you have any benefits such company car, medical cover etc. If so the benefit value needs to be added to your salary. 

Your  first year is 22/23 as payment started  from September 22. The tax year is 6 April to 5 April the following year.

So, is your net adjusted income for the year 22/23 over £50,000?

If not, then you do need to do anything for 22/23. 

As you only claim child benefit from September then yes, you are claiming child benefit for part of the year for 22/23

You then need to look at your adjusted net income for  23/24. Will it be over £50,000?

sky_rat

Thanks all

So if I paid £120 a month pension for example, then I should multiply that by 12 (ie £1,440) and then subtract that from my gross yearly salary? 

I don’t get any other benefits other than basic cheap medical cover, I’m not sure it works but I did see £61 on my P11D form

r6mile

What’s on your P60?

Dazed_and_C0nfused

sky_rat said:

Thanks all

So if I paid £120 a month pension for example, then I should multiply that by 12 (ie £1,440) and then subtract that from my gross yearly salary? 

I don’t get any other benefits other than basic cheap medical cover, I’m not sure it works but I did see £61 on my P11D form

Only certain types of pension contributions can be deducted when calculating your adjusted net income.

A lot are already taken into account before your taxable income (the starting point for determining your adjusted net income) is calculated so if you deducted them again you would be double counting them.

What method is used to contribute to the pension?

Net pay?
Relief at source?
Salary sacrifice?

sky_rat

r6mile said:

What’s on your P60?

My P60 goes to April 2023, but I don't know what figure to use.... 

daveyjp

If you have a straightforwards PAYE job for which you have been paid a salary of over £50,000 just do an online self assessment and the figure will be calculated for you. 

 It is simple, it tells you which figures to enter in to which box, all available from your P60 and you can save and review before submission.  If charge is zero no need to submit at all.

For 22/23 you have until 31 January 2024 to submit an online form and pay any amounts due.

sky_rat

Dazed_and_C0nfused said:

sky_rat said:

Thanks all

So if I paid £120 a month pension for example, then I should multiply that by 12 (ie £1,440) and then subtract that from my gross yearly salary? 

I don’t get any other benefits other than basic cheap medical cover, I’m not sure it works but I did see £61 on my P11D form

Only certain types of pension contributions can be deducted when calculating your adjusted net income.

A lot are already taken into account before your taxable income (the starting point for determining your adjusted net income) is calculated so if you deducted them again you would be double counting them.

What method is used to contribute to the pension?

Net pay?
Relief at source?
Salary sacrifice

I have no idea about the method used to contribute towards the pension, it just appears on my payslip as a deduction.

The figures on my payslip never make sense either, other than the gross monthly figure which is my salary divided by 12.

I've used this website in the past, but there are always discrepancies with the real figures...

https://listentotaxman.com

In fact I produced my own spreadsheet that replicates listentotaxman.com, I even pulled the tax and NI rates from the goverment website....

https://www.gov.uk/income-tax-rates/personal-allowances

https://www.gov.uk/national-insurance/national-insurance-contributions-how-much-you-pay

https://www.gov.uk/national-insurance-rates-letters/contribution-rates

Yet despite this, the figures are always different.

The tax system is so complicated, its impossible to know what's going on.

For example, I've never understood why my monthly wage varies even though my salary remains the same.

How am I supposed to caclulate child benefit tax, when I am unable to calculate the figures on my payslip without there being discrepancies ?

Even my pension payments don't make sense, I think Im supposed to pay 3% but these payments vary too and the rate works out to be between 3% and 4%.

I still don't understand how to calculate my adjusted net income -  I thought gross was before tax and net was after tax ?

Shouldn't HMRC be telling me how much tax I need to pay ?

They obviously use different methods for calculating tax charges.

sky_rat

daveyjp said:

If you have a straightforwards PAYE job for which you have been paid a salary of over £50,000 just do an online self assessment and the figure will be calculated for you. 

 It is simple, it tells you which figures to enter in to which box, all available from your P60 and you can save and review before submission.  If charge is zero no need to submit at all.

For 22/23 you have until 31 January 2024 to submit an online form and pay any amounts due.

My job is a straight forward PAYE job, the only benefits I have is a pension with Legal & General (I pay 3% and the company pays 5%) and healthcare with https://www.paycare.org/ (basic level 1 plan)

Do you have a link to the online self assessment ?

Thanks for confirming the deadline, at least I have until 31 January 2024 to sort this out.