Child Benefit Higher Salary

[Deleted User] · 11 September 2019 at 6:08PM

Good evening,

I have a quick query regarding child benefit and just want some clarification. I earn £59k a year and sacrifice 8% monthly into my pension, my partner earns £12.5k a year.

Am I right in thinking that child benefit is only based on one persons salary over £50k? So we would have to pay a percentage back should we claim it?

If this is the case, why is it only based on one persons salary, surely it should be based on a joint income as I could earn £49k and my partner could earn £49k and we would receive it? Or is this just another rule where Britain has not thought about that issue.

Thanks

JGB1955 · 11 September 2019 at 6:18PM

It's if 'you or your partner' earn more than £50,000....so it's not based on one person's salary...
https://www.gov.uk/child-benefit-tax-charge

[Deleted User] · 11 September 2019 at 7:31PM

Hi,

Thanks for your reply, on that link it says ‘if you have an individual income over £50,000’

To me that reads as a single persons salary or am I reading it wrong.

Thanks

Lorian · 11 September 2019 at 7:55PM

The rule is the rule, and currently you would incur a tax liability because of it. If you do claim it, Increasing your pension contribution to get you below the limit is one possible move.

You might still want your partner to be claiming it, for pension sake.

pramsay13 · 11 September 2019 at 8:06PM

It is based on one person's salary so in a household there might be two adults earning £49k (total £98k) and still getting child benefit, or alternatively one earning £60k and not getting child benefit.

Dazed_and_confused · 11 September 2019 at 10:18PM

Your "salary" is often irrelevant for High Income Child Benefit Charge purposes.

What counts is adjusted net income.

In the op's case the starting point would be taxable pay of £54,280. Other taxable income such as company benefits or savings interest might increase this. And personal pension contributions or gift aid payments could reduce it.

The salary sacrifice pension contributions cannot be deducted as they have already been taken into account when establishing the taxable pay (P60 figure).

timbotambo · 17 September 2019 at 4:01PM

Trust me on this - at that wage, don't bother to claim. I was in the same boat and you have to pay back almost the lot via self assessment and it's a right pain in the backside if it's not something you normally do. The only micro benefit is you can put it into a savings account, claim a tiny bit of interest) and pay back. Really is not worth it IMHO.

DavidT67 · 17 September 2019 at 5:48PM

The lower earning partner should claim regardless of the higher earners income, as they will get NI credits toward the state pension, which they might miss on if their income drops below the NI threshold.

People's circumstances can and do change unexpectedly, so better to have the benefit now, then repay later.

It's an interest free loan from the government, not to be sniffed at !

belakb · 20 December 2019 at 1:55PM

Hi There,

I am in a very similar situation, my wife earns circa £5k per annum and I have recently jumped over the £50k mark and if I include company (BIK value etc) and small bonus it will be over £60k. With two young kids (2/6 yo) we have always put money from Child Ben. aside for them when they grow up.
It would be shame to lose this now only because my carrier has finally gone in the right direction.

If you look at total Family income we might as well both be on circa £32.5k each without all this messing about...

I did some research myself and have few questions, would appreciate some help:
1. Do I need to include company car P11D monetary value when calculating total income?
2. Is there a limit how much I can offset as pert of my pension contribution?
3. Would I be able to offset some of my pre tax Income by opening a Kids ISA account and transferring max allowance on a direct debit each month?
4. If point 3 is applicable could I do this for both kids?

Many thanks
Merry Christmas !

DavidT67 wrote: »

The lower earning partner should claim regardless of the higher earners income, as they will get NI credits toward the state pension, which they might miss on if their income drops below the NI threshold.

People's circumstances can and do change unexpectedly, so better to have the benefit now, then repay later.

It's an interest free loan from the government, not to be sniffed at !

Caz3121 · 20 December 2019 at 2:23PM

have a read of the HMRC guidance
https://www.gov.uk/guidance/adjusted-net-income

Dazed_and_confused · 22 December 2019 at 11:33AM

1. Do I need to include company car P11D monetary value when calculating total income?
2. Is there a limit how much I can offset as pert of my pension contribution?
3. Would I be able to offset some of my pre tax Income by opening a Kids ISA account and transferring max allowance on a direct debit each month?
4. If point 3 is applicable could I do this for both kids?

1. Yes, you need to include all taxable income so things like savings interest (but not from an ISA), dividends, P11D benefits all count. However the High Income Child Benefit Charge isn't based on total income. It is adjusted net income which counts for that.

2. There are limits to how much you can contribute and get tax relief however unless you are talking very large sums they won't impact you. Don't forget though that you cannot deduct all your pension contributions, some may already be deducted when working out your P60 pay figure, for example contributions under a net pay scheme.

You cannot deduct salary sacrifice pension contributions as you don't make these, your employer does. But your P60 figure would be much less so they are effectively taken into account as a result of that.

3 & 4. I'm not really sure what you exactly you mean but irrespective of that I doubt very much that whatever it is would have any impact on your adjusted net income.

Child Benefit Higher Salary

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