High Income Child Benefit Charge letter

fossman

I received a letter from HMRC asking me to check if I need to pay the HICBC for 2023/24.

I have used the calculator and it confirmed what I already knew (my gross income is over the threshold but my pension contributions bring me under the threshold).

So my question is, why have I received the letter and should I check with HMRC to confirm my figures are correct?

Dazed_and_C0nfused

fossman said:

I received a letter from HMRC asking me to check if I need to pay the HICBC.

I have used the calculator and it confirmed what I already knew (my gross income is over the threshold but my pension contributions bring me under the threshold).

So my question is, why have I received the letter and should I check with HMRC to confirm my figures are correct?

What method is used to get money into your pension?

Net pay
Relief at source
Salary sacrifice

fossman

Dazed_and_C0nfused said:

fossman said:

I received a letter from HMRC asking me to check if I need to pay the HICBC.

I have used the calculator and it confirmed what I already knew (my gross income is over the threshold but my pension contributions bring me under the threshold).

So my question is, why have I received the letter and should I check with HMRC to confirm my figures are correct?

What method is used to get money into your pension?

Net pay
Relief at source
Salary sacrifice

My pension payments are made outside of payroll, so net pay.

Dazed_and_C0nfused

fossman said:

Dazed_and_C0nfused said:

fossman said:

I received a letter from HMRC asking me to check if I need to pay the HICBC.

I have used the calculator and it confirmed what I already knew (my gross income is over the threshold but my pension contributions bring me under the threshold).

So my question is, why have I received the letter and should I check with HMRC to confirm my figures are correct?

What method is used to get money into your pension?

Net pay
Relief at source
Salary sacrifice

My pension payments are made outside of payroll, so net pay.

Net pay contributions can only be done as a payroll deduction and are never deductable when calculating your adjusted net income.

I think you have misunderstood something here. 

Does your pension company add 25% to your net contribution?

fossman

Dazed_and_C0nfused said:

fossman said:

Dazed_and_C0nfused said:

fossman said:

I received a letter from HMRC asking me to check if I need to pay the HICBC.

I have used the calculator and it confirmed what I already knew (my gross income is over the threshold but my pension contributions bring me under the threshold).

So my question is, why have I received the letter and should I check with HMRC to confirm my figures are correct?

What method is used to get money into your pension?

Net pay
Relief at source
Salary sacrifice

My pension payments are made outside of payroll, so net pay.

Net pay contributions can only be done as a payroll deduction and are never deductable when calculating your adjusted net income.

I think you have misunderstood something here. 

Does your pension company add 25% to your net contribution?

Just read the definitions, my contributions are relief at source. I pay the net amount in and the scheme claims the tax relief which gets added to my pot.

But the HMRC calculator states that both contributions paid from your salary and contributions not paid from your salary are an allowable deduction.

So my contributions are an allowable deduction.

Dazed_and_C0nfused

fossman said:

Dazed_and_C0nfused said:

fossman said:

Dazed_and_C0nfused said:

fossman said:

I received a letter from HMRC asking me to check if I need to pay the HICBC.

I have used the calculator and it confirmed what I already knew (my gross income is over the threshold but my pension contributions bring me under the threshold).

So my question is, why have I received the letter and should I check with HMRC to confirm my figures are correct?

What method is used to get money into your pension?

Net pay
Relief at source
Salary sacrifice

My pension payments are made outside of payroll, so net pay.

Net pay contributions can only be done as a payroll deduction and are never deductable when calculating your adjusted net income.

I think you have misunderstood something here. 

Does your pension company add 25% to your net contribution?

Just read the definitions, my contributions are relief at source. I pay the net amount in and the scheme claims the tax relief which gets added to my pot.

But the HMRC calculator states that both contributions paid from your salary and contributions not paid from your salary are an allowable deduction.

So my contributions are an allowable deduction.

Of those three methods the only ones you can deduct when calculating adjusted are relief at source contributions.

As you are using that method you can deduct them, it's the gross contribution, inclusive of the basic rate relief added by the pension company that you deduct.

Now thats been resolved this is an interesting point.

So my question is, why have I received the letter and should I check with HMRC to confirm my figures are correct?

If you are confident your figures are correct (I presume you have counted all taxable income?) then you don't need to do anything.

But it is odd for HMRC to ask this if they are aware of your relief at source contributions from you claiming higher rate relief. Doesn't seem the greatest use of their resources.

fossman

Yes I included all my taxable income in the calculation.

This is not the first year my gross income has been over the threshold (with net income being under) which is why I thought it was unusual that I received the letter.

A cynic may think they are just trying to catch people out. If people misunderstood the letter and incorrectly sign up to complete tax returns it opens them up to incorrectly paying the HICBC and in future forgetting to file the tax returns resulting in late filing penalties.

TheSpectator

fossman said:

Yes I included all my taxable income in the calculation.

This is not the first year my gross income has been over the threshold (with net income being under) which is why I thought it was unusual that I received the letter.

A cynic may think they are just trying to catch people out. If people misunderstood the letter and incorrectly sign up to complete tax returns it opens them up to incorrectly paying the HICBC and in future forgetting to file the tax returns resulting in late filing penalties.

That's some conspiracy theory.

Do HMRC know about your RAS contributions, i.e. are you getting relief through your tax code?

fossman

TheSpectator said:

fossman said:

Yes I included all my taxable income in the calculation.

This is not the first year my gross income has been over the threshold (with net income being under) which is why I thought it was unusual that I received the letter.

A cynic may think they are just trying to catch people out. If people misunderstood the letter and incorrectly sign up to complete tax returns it opens them up to incorrectly paying the HICBC and in future forgetting to file the tax returns resulting in late filing penalties.

That's some conspiracy theory.

Do HMRC know about your RAS contributions, i.e. are you getting relief through your tax code?

Yes, I notify HMRC each year of the pension contributions I will be making and they adjust my tax code for the extra tax relief (the 40% tax band relief).