High Income Child Benefit Charge

Dazed_and_C0nfused

trfc20222 said:

Dazed_and_C0nfused said:

trfc20222 said:

Looking at it again, is it saying that I have not paid enough tax in my paid employment during the year? as the High Income Child Benefit Charge is correct on the calculation

I have not done any self employed work during the year so would be a salaried underpayment if so

There is nothing that unusual about underpaying (or overpaying) tax on PAYE.

Have you checked what tax code was used by your employer in 2023-24?

Are you certain you have entered all the other information correctly?

Thanks, the tax code on my P60 is 1383M, I have double checked the figures and everything submitted matches my P60

You may wish to keep a closer eye on your tax affairs going forward.

1383M means you were provisionally given Marriage Allowance in your 2023-24 tax code.

As you are actually a higher rate payer in 2023-24 you lose the benefit of Marriage Allowance and will owe £504 as a result.

£504 + £1,595 + £4 + £3.60 (tax owed due to how PAYE works)  = £2,106.60

Extra pension contributions would have been very tax efficient in this situation.

Strummer22

Dazed_and_C0nfused said:

Extra pension contributions would have been very tax efficient in this situation.

Whilst you can't retrospectively make pension contributions for last tax year, you can for gift aid donations. So if you'd rather give some money to a charity than to the tax man, you can do that. Here's how it worked out for me (calcs were via self-assessment): https://forums.moneysavingexpert.com/discussion/comment/80708356#Comment_80708356

Flugelhorn

Strummer22 said:

Dazed_and_C0nfused said:

Extra pension contributions would have been very tax efficient in this situation.

Whilst you can't retrospectively make pension contributions for last tax year, you can for gift aid donations. So if you'd rather give some money to a charity than to the tax man, you can do that. Here's how it worked out for me (calcs were via self-assessment): https://forums.moneysavingexpert.com/discussion/comment/80708356#Comment_80708356

can you explain this to me (higher tax rate payer - S-A says I need to pay 2.5K for 23/24 - mainly savings interest) - can I reduce it by paying it to my favourite local charity?? 

eskbanker

Flugelhorn said:

Strummer22 said:

Dazed_and_C0nfused said:

Extra pension contributions would have been very tax efficient in this situation.

Whilst you can't retrospectively make pension contributions for last tax year, you can for gift aid donations. So if you'd rather give some money to a charity than to the tax man, you can do that. Here's how it worked out for me (calcs were via self-assessment): https://forums.moneysavingexpert.com/discussion/comment/80708356#Comment_80708356

can you explain this to me (higher tax rate payer - S-A says I need to pay 2.5K for 23/24 - mainly savings interest) - can I reduce it by paying it to my favourite local charity?? 

If you've already submitted your SA return then you can't go for the retrospective gift aid 'loophole'.

Flugelhorn

eskbanker said:

Flugelhorn said:

Strummer22 said:

Dazed_and_C0nfused said:

Extra pension contributions would have been very tax efficient in this situation.

Whilst you can't retrospectively make pension contributions for last tax year, you can for gift aid donations. So if you'd rather give some money to a charity than to the tax man, you can do that. Here's how it worked out for me (calcs were via self-assessment): https://forums.moneysavingexpert.com/discussion/comment/80708356#Comment_80708356

can you explain this to me (higher tax rate payer - S-A says I need to pay 2.5K for 23/24 - mainly savings interest) - can I reduce it by paying it to my favourite local charity?? 

If you've already submitted your SA return then you can't go for the retrospective gift aid 'loophole'.

not hit the button yet... 

Strummer22

Flugelhorn said:

Strummer22 said:

Dazed_and_C0nfused said:

Extra pension contributions would have been very tax efficient in this situation.

Whilst you can't retrospectively make pension contributions for last tax year, you can for gift aid donations. So if you'd rather give some money to a charity than to the tax man, you can do that. Here's how it worked out for me (calcs were via self-assessment): https://forums.moneysavingexpert.com/discussion/comment/80708356#Comment_80708356

can you explain this to me (higher tax rate payer - S-A says I need to pay 2.5K for 23/24 - mainly savings interest) - can I reduce it by paying it to my favourite local charity?? 

Yes.You individually will not be better off overall, as the donation to charity will need to be more than the amount of tax you owe. In my example I donated £1,650 which saved me £1,190 in tax, so was a cost to me of £490. £1,190/£1,650 = 72% which I think was my marginal tax rate for income between £50 - 60k taking the loss of marriage allowance into account, so it does make sense!

It's just I'd rather the charity get the money, it's an attractive option as the charity can also claim gift aid.

The way this works is that grossed-up gift aid (and pension) contributions are subtracted from your gross income to calculate adjusted net income. If your adjusted net income is less than £50,270 you don't pay any higher rate tax and retain marriage allowance, if applicable. Get it below £50,100 and there's no HICBC (this threshold has been increased to over £60k for the current tax year though).

As warned by Dazed_and_C0nfused in that thread, HMRC might get shirty if you claim the retrospective donation in an amended return, but I presume as long as you can prove you made the donation it will work out OK in the end?

Flugelhorn

cheers - looks like you did well out of it because of MA and being closer to the cutoff. I have no pension / CB or MA to adjust the figures. 

kinger101

Strummer22 said:

Dazed_and_C0nfused said:

Extra pension contributions would have been very tax efficient in this situation.

Whilst you can't retrospectively make pension contributions for last tax year, you can for gift aid donations. So if you'd rather give some money to a charity than to the tax man, you can do that. Here's how it worked out for me (calcs were via self-assessment): https://forums.moneysavingexpert.com/discussion/comment/80708356#Comment_80708356

You have to make the election at the first submission of the tax return.  

And the net position would be you'd be worse off anyway.

It can make sense for tax free childcare and nursery hours, as the marginal tax rate there can exceed 100 percent.  

trfc20222

Dazed_and_C0nfused said:

trfc20222 said:

Dazed_and_C0nfused said:

trfc20222 said:

Looking at it again, is it saying that I have not paid enough tax in my paid employment during the year? as the High Income Child Benefit Charge is correct on the calculation

I have not done any self employed work during the year so would be a salaried underpayment if so

There is nothing that unusual about underpaying (or overpaying) tax on PAYE.

Have you checked what tax code was used by your employer in 2023-24?

Are you certain you have entered all the other information correctly?

Thanks, the tax code on my P60 is 1383M, I have double checked the figures and everything submitted matches my P60

You may wish to keep a closer eye on your tax affairs going forward.

1383M means you were provisionally given Marriage Allowance in your 2023-24 tax code.

As you are actually a higher rate payer in 2023-24 you lose the benefit of Marriage Allowance and will owe £504 as a result.

£504 + £1,595 + £4 + £3.60 (tax owed due to how PAYE works)  = £2,106.60

Extra pension contributions would have been very tax efficient in this situation.

Thanks for this, all makes sense

Lesson learnt from my end and will make sure I take a look at it all for future years

Thanks again