Paying back child benefit and tax code

KaratePigeon

Hi,

I'm so confused, and more so after an unhelpful call to HMRC.

I've always earned below the threshold to pay back child benefit, but last year (tax year ended april 26) due to a one-off bonus my earnings were over £80k so I understand I'll have to pay it all back (claiming for 3 kids).

This year my earnings will be back below 60k so nothing to pay.

When can I start paying back through PAYE, do I have to wait until next tax year? I'd rather start paying it now if possible rather than have big bill looming.

Since April my tax code has been wrong as it's assuming I'll be earning over 80k again. I didn't update my estimated earnings as I thought the extra money will be used for my repayments. But after trying to understand this, this won't happen, it'll just get paid back to me and I'll still have a bill later on. So I tried to speak to someone at HMRC and they've updated my earnings, but seemed very confused about how I pay anything back, saying there is no repayment showing on my account.

I was also told I don't need to do a tax return as it's all done by PAYE.

The HMRC app says I'm still registered for self assessment and need to ring them to change it?

eskbanker

Why not just pay monthly into a savings account, to earn interest on that money while being able to settle the bill later on?

KaratePigeon

I struggle with self-discipline 🤣 but yes will do that if I have to.

sheenas

You need to phone them. You may well be paying to much tax for this tax year. It is simpler to phone them and explain what has happened, else you could get a nasty one off bill in Jan. Provide an estimated earnings for this year.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82137446#Comment_82137446

OP has already done that:

So I tried to speak to someone at HMRC and they've updated my earnings, but seemed very confused about how I pay anything back, saying there is no repayment showing on my account

There are two separate issues at play here - estimated current year earnings can indeed be adjusted at any time, but assessment of prior year liability (and notification of any resulting claim or repayment) will only happen over the next few months once HMRC go through their annual process.

sheramber

Have you submitted a 25/26 self assessment return?

That will bring out any underpayment ( note it is not a repayment,which is for HMRC paying you.)

You can indicate on the return that you do not want any underpayment included in your code number.

The amount will be payable by 31 January 27 , but you can pay it at any time once the system is updated.

KaratePigeon

Yes I rang them, the person on the phone didn't seem very knowledgeable, kept putting me on hold to check things, then said they'd transfer me to a different department when it cut off. I didn't fancy ringing back to be put on hold for half an hour and potential get the same person, I was also struggling to understand their accent.

I haven't done a self assessment return, I filled something in a few months ago to opt in to repayments (underpayments! ) via PAYE. I since had an email saying I now didn't have to do any self assessments, but then I've had a few reminding me to do it. The person on the phone said I didn't have to. the app says I'm still registered for it! Should I just do one anyway?

sheramber

If you elected for it to be collected through PAYE your code number will be adjusted to include it.
Whether 26/27 or 27/28 will depend on when you applied for the change to PAYE.

You need to advise HMRC self assessment that you no longer need to complete a self assessment return.( there is no direct link between self assessment system and the PAYE system.)

The best time to call is as soon as lines open to be at the front of the queue.

You will not get a bill if you elected for it to done through PAYE.

You will pay extra tax each month to collect it.

Has your code number for 26/27 been amended to include it?

If not It will be included in 27/28.

KaratePigeon

Thanks, my code is now 1257L so just a normal code. Maybe I'll have to wait until next April before they start deducting it then. Maybe I'll get a big chunk back in my next pay which i'll have to put in a savings account.

i will try to ring them again (can't do 8am unfortunately as school run, but hopefully I will get someone knowledgeable) as the app still suggests I'm registered for self assessment even though the person on the phone said I wasn't.