High Income Child Benefit Charge

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  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
    Uniform Washer
    Banks stopped deducting tax from interest about two and a half years ago.

    It may be that the interest itself is going to be taxed at a 0% tax rate (assuming it's no more than £500) but it is still part of your taxable income and "adjusted net income" which the High Income Child Benefit Charge is calculated on so it could increase the charge payable.
  • user1168934
    user1168934 Posts: 564 Forumite
    First Anniversary Name Dropper Photogenic First Post
    Dazed_and_confused wrote: »
    Banks stopped deducting tax from interest about two and a half years ago.

    It may be that the interest itself is going to be taxed at a 0% tax rate (assuming it's no more than £500) but it is still part of your taxable income and "adjusted net income" which the High Income Child Benefit Charge is calculated on so it could increase the charge payable.


    Thank you, you are probably correct. I might not have noticed whether the banks are deducting tax anymore or not. I will check.
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  • user1168934
    user1168934 Posts: 564 Forumite
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    Sibbers123 wrote: »
    No one would advise you to commit fraud.


    Fraud was never my intent. It was merely whether I go and tell them or let them come back to me, clearly, I should go and register for self assessment and file a tax return.
    Thanks for your help.
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  • Pallinson
    Pallinson Posts: 1 Newbie
    Apologies for the repeated questions however what is listed in the calculator and the ANI section of the govt website seems to contradict.
    I have a standard pension which is deducted from my salary prior to tax (Left hand of payslip) so should I be deducting this amount from my income? The calculator states 'Do not include any contributions deducted before tax' in the allowable deductions section which would suggest not but in the ANI guidance and elsewhere it states that ANI is total taxable income less pension contributions (either gross or or relief at source)
  • Avied
    Avied Posts: 3 Newbie
    I'm looking at my wifes P60 that shows she earns £53k but her pension contributions are £4500 per year, on the .gov calculator it says that she does not need to pay anything. Does she still need to fill out a self assessment form. Were both PAYE and have never needed to do self assessment. Our kids are 16 now so CB won't be with us forever, are we stuck with years of self assessment because of this. An utter shambles of a system, PAYE is there so I don't have to check my tex liability, my employer sends all my details to HMRC for me.
  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
    Uniform Washer
    edited 8 November 2018 at 10:02PM
    I have a standard pension which is deducted from my salary prior to tax (Left hand of payslip) so should I be deducting this amount from my income?

    No. It has already been deducted from your salary so your taxable pay, the amount that is shown in your P60, is lower.

    If you deducted it again you would be double counting it.

    Not sure you have read through the ANI guidance far enough.

    Step 1 states,
    Take off any tax reliefs that apply like:

    payments made gross to pension schemes - those that have been made without tax relief


    Step 3 - take off pension contributions
    If you made a contribution to a pension scheme where your pension provider has already given you tax relief at basic rate, take off the ‘grossed-up’ amount - what you paid plus the basic rate of tax.

    So, for every £1 of pension contribution you made, take £1.25 from your ‘net income’.

    Your contributions don't fall into either category.
  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
    Uniform Washer
    I'm looking at my wifes P60 that shows she earns £53k but her pension contributions are £4500 per year

    Have you treated the pension contributions correctly?

    Does she actually have a salary of £57.5k which becomes taxable salary of £53k after pension contributions?

    Or is she paying into a personal pension?
    Does she still need to fill out a self assessment

    Depends on her adjusted net income. Which is still an unknown quantity.
    are we stuck with years of self assessment because of this

    If you or your wife have reason to file a return then yes. If not you won't need to.
    PAYE is there so I don't have to check my tex liability, my employer sends all my details to HMRC for me.

    PAYE doesn't remove the need to ensure your tax is correct. The ultimate responsibility lies with you although most of the time PAYE means the correct tax is deducted during the year.
  • qwertyqwerty
    qwertyqwerty Posts: 131 Forumite
    First Post First Anniversary Combo Breaker
    Hi I am going to be starting a new job in 2 weeks which will take my salary from 43k to well above the 60k higher rate limit. Question is if I ring HMRC now and cancel the Child Benefit am I still liable to fill out a self assessment for the tax year? If so is it more worthwhile to maintain the child benefit for the rest of the tax year, fill out the self assessment and cancel the CB from the next tax year?

    When I used the tax calculator it said I would need to pay back £645 for this tax year. 6 months of child benefit is £496.80, so not sure why I would need to pay back more than I have claimed for in this tax year, if I was to cancel it now
  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
    Uniform Washer
    The higher rate limit is currently £46,350 (less for Scottish resident taxpayers).

    You might find it simpler to keep the Child Benefit for the full tax year.

    Any High Income Child Benefit Charge payable for 2018:19 isn't payable until 31:01:2020 so you could be earning some interest on the money received in the interim.

    And don't forget "salary" is irrelevant for High Income Child Benefit Charge purposes. Google "adjusted net income" for the accurate details.

    If you pay into a company pension your £43k salary could easily be just say £39k taxable income.

    Both tax and the High Income Child Benefit Charge are calculated on an annual basis so not sure why you think what Child Benefit you get in a six month period is relevant (unless of course it's because the child was born 6 months before the end of they'll tax year?).
  • xylophone
    xylophone Posts: 44,375 Forumite
    Name Dropper First Anniversary First Post
    Hi I am going to be starting a new job in 2 weeks which will take my salary from 43k to well above the 60k higher rate limit.

    Make pension contributions in the current tax year?

    https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/reduce-high-income-child-benefit-charge/
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