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  • FIRST POST
    • keepthelinguini
    • By keepthelinguini 9th Aug 17, 2:42 PM
    • 5Posts
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    keepthelinguini
    High Income Child Benefit Charge
    • #1
    • 9th Aug 17, 2:42 PM
    High Income Child Benefit Charge 9th Aug 17 at 2:42 PM
    I'm so annoyed. I've just received a big bill from HMRC and been told I'm going to pay a penalty, and I think it's completely unjust.

    I'm a PAYE employee.

    In 2013 when the High Income Child Benefit Charge was introduced I earned under the £50,000 threshold - so the change in rules didn't apply to me.

    Since then my income has gone slightly over £50,000.

    I've just received a bill for well over £1k for missed HICBC in the two years ending 2015 and 2016. I called them to query, and they said I should have registered for self assessment when my income went over £50k, and that I'll be charged a penalty on top of the amount I owe - around £250 - for failing to notify them.

    HOW was I supposed to know I need to start filling out a tax return when my income went above £50k?

    I'm planning to appeal the penalty, but the lady in the call centre told me that it would fail because you can't claim ignorance of the rules.

    IT'S SO UNJUST!

    If anyone has any advice, I'd be very pleased to hear it.
Page 8
    • Spidernick
    • By Spidernick 21st Jul 18, 11:31 PM
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    Spidernick
    My gross salary is about £54k but I bring it down to about £49k after pension contributions on a salary sacrifice and also some charity contributions.

    Presumably I don’t need to do a SA?
    Originally posted by loofer
    I'm not sure that post #139 is 100% correct. I cannot find anything specific about this now, but remember reading that, although there is ultimately no claw back of the Child Benefit in this scenario, a Self-Assessment return should still be filed, as the earnings are over £50K. I am in the same position as you and file an SA return every year.

    An old post, I know, but I do feel for these guys in this situation. Working overtime to earn some more money and a chunk gets taken off your child benefits for it. Whereas if you didn't do the overtime, you'd be fine.
    Originally posted by Potbellypig
    Given the number of people who don't even get paid for overtime (i.e. most white-collar workers in the private sector), I would imagine sympathy for someone in this position would be in short supply!
    'I want to die peacefully in my sleep, like my father. Not screaming and terrified like his passengers.' (Bob Monkhouse).

    Sky? Believe in better.

    Note: win, draw or lose (not 'loose' - opposite of tight!)
    • dori2o
    • By dori2o 22nd Jul 18, 12:27 AM
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    dori2o
    I'm not sure that post #139 is 100% correct. I cannot find anything specific about this now, but remember reading that, although there is ultimately no claw back of the Child Benefit in this scenario, a Self-Assessment return should still be filed, as the earnings are over £50K. I am in the same position as you and file an SA return every year.



    Given the number of people who don't even get paid for overtime (i.e. most white-collar workers in the private sector), I would imagine sympathy for someone in this position would be in short supply!
    Originally posted by Spidernick
    If your pension contributions are via an employers scheme and are taken via a net pay arrangement (i.e. they are taken before tax is deducted from your salary) and this leaves your income below £50k, then you shouldn't need to do a return as the income on your P60 will show as being less than £50k.

    That is unless you have other income or benefits in kind that take your income above the £50k limit.

    If however the contributions are taken by your employer from your after tax pay, or you pay into a private scheme, then all HMRC will see is that your income on your P60 is more than £50k.

    You then need to tell them, via the tax return, what your income is and what reliefs you are claiming.
    To equate judgement and wisdom with occupation is at best . . . insulting.
    • stevedresden
    • By stevedresden 4th Sep 18, 1:04 PM
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    stevedresden
    I got the letter today - totally out of the blue

    I do remember the announcement back in 2013, but I was only earning £40k then so it didn't trouble me

    I still only earn £45k pa, but due to the role I was doing in the past 3 tax years 2016/2017/2018 I was doing a whole load of really stressful overtime and travelling which meant my taxable income was over £50k for those 3 years (I actually had to check my P60 to find this out, it never really registered at the time)

    Thankfully this year I'm no longer doing that role and I don't expect to earn any more than my basic salary again (and I have my stress-free life back)

    I'm happy to pay anything I owe, but the letter is really vague about what happens now. I've registered for self-assessment as it seems to suggest, but I didn't receive any kind of acknowledgement

    Anyone been through similar that can explain what happens now?

    One other thing that I'm confused about is that this extra taxable income has also taken me into the 40% tax bracket and I've seen mention of claiming back some kind of tax relief on my pension. Is there a simple priner anywhere that explains this and what I have to do?
    • stevedresden
    • By stevedresden 4th Sep 18, 1:34 PM
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    stevedresden
    OK - scratch that last bit about pension tax relief, it looks like my employer pension is done via salary sacrifice, so as I understand it, that means i get the correct tax relief anyway?
    • stevedresden
    • By stevedresden 4th Sep 18, 1:47 PM
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    stevedresden
    Also - I'm particularly interested in the penalties situation. In theory they might try and charge me penalties for not self-assessing in 2016/2017

    But I saw this
    https://www.rossmartin.co.uk/sme-tax-news/3364-high-income-child-benefit-tax-charge-no-discovery


    Mr Robertson and his wife were teachers and employed under PAYE and they were not under Self Assessment.

    With income in excess of £50,000, Mr Roberston had a duty to notify HMRC that he was liable to High income child benefit charge (HICBC).
    He failed to notify as he was unaware of the legislation.
    HMRC atttempted to raise a discovery assessment and penalties, the taxpayer appealed.
    The first tier tax tribunal found that no penalties could be applied, as there was no potential lost revenue to assess. There was no self-assessment because no notice to file was given by HMRC, HMRC could not make a discovery assessment as the HICBC is not income, a requirement of s 29(1) TMA.
    The letter from HMRC that I got today does say that I can avoid the penalty for 2017 if I tell them now, and may be able to avoid the penalty for earlier years if i have a "reasonable excuse"

    Sounds like they are on the back foot
    • jimmo
    • By jimmo 6th Sep 18, 7:44 PM
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    jimmo
    A First Tier Tribunal decision doesn't really count for anything apart from the actual case that was taken. The loser, HMRC in that particular case, could, subject to procedural rules, appeal to the Upper Tribunal and the decision of the Upper Tribunal could create a legal precedent.
    As things stand then HMRC are perfectly entitled to maintain their view that penalties are chargeable and any person who is charged penalties can argue against, perhaps resulting in more cases being referred to the First Tier Tribunal.
    By contrast you might like to read this one where the boot is on the other foot.
    https://www.dorsetoffice.com/sme-tax-news/3392-hicbc-failure-to-notify-ignorance-is-no-reasonable-excuse
    • brianfly
    • By brianfly 10th Sep 18, 10:12 AM
    • 2 Posts
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    brianfly
    High Income Charge
    So this week I also received a letter from HMRC regarding this. Turns out that since 2015 we have been receiving Child Benefit while i earn over £50k. In 2013 this wasn't the case and we just didn't really think about it when i changed jobs and got a bigger salary. To be honest I wasn't even aware that my wife was claiming Child Benefits and didn't receive anything in the meantime to remind us of our responsibilities so it just got missed entirely. Until now.

    The letter I received was pretty fair and stated that I may not be charged penalties etc and i have no issue with paying back the money if we are not entitled to it, however I just wanted to understand the process for repayment that others have followed. I also understand that this isn't a 'tax', however I am PAYE so can this be repaid using tax code re-calculation? We are talking upwards to £5.5-£6k once all the years are calculated and that is simply not an amount of money we just have lying around, its not like we have been hoarding the CB money and accruing all the interest.

    Appreciate if anyone else was in a similar situation and what was accepted by HMRC.

    As an aside, while doing some research on this I have come across numerous forums where people have been debating the fairness of the eligibility criteria. I cannot understand how the current process is fair at all. Whilst i understand the argument regarding 2 working parents v 1 high earner + 1 stay at home parent and all the pro's and cons, however we seem to fall into the worst category.

    Whereas 2 earners on £49k each have a total household income of £98k and keep everything, myself and my wife both work full time with me being a high earner and her earning around £30k or so. This is less than £98k combined but we still have all the outgoings of couple 1 (childcare costs, 2 sets of commuting costs etc) as well as the additional taxation costs from my salary. However we are eligible for nothing.

    Now I am not saying we should be eligible. I have no issue with the threshold being reduced. However if someone can clearly explain how this scenario is fair then I am all ears.
    • Pennywise
    • By Pennywise 10th Sep 18, 10:34 AM
    • 10,490 Posts
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    Pennywise
    However if someone can clearly explain how this scenario is fair then I am all ears.
    Originally posted by brianfly
    Tax isn't fair nor logical, but it's the law unfortunately. To get it changed you need to lobby your MP. We have to thank or LibDem friends for the introduction of the child benefit "tax". You may like to remember that at the next general election.
    • brianfly
    • By brianfly 10th Sep 18, 11:32 AM
    • 2 Posts
    • 1 Thanks
    brianfly
    Tax isn't fair nor logical, but it's the law unfortunately. To get it changed you need to lobby your MP. We have to thank or LibDem friends for the introduction of the child benefit "tax". You may like to remember that at the next general election.
    Originally posted by Pennywise
    So you can't provide a clear explanation. Thanks for your worthwhile input.

    BTW its a charge, not a tax. You may like to remember that before posting sanctimonious replies that offer nothing.
    • ayshfm1
    • By ayshfm1 10th Sep 18, 11:53 AM
    • 1 Posts
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    ayshfm1
    This is an old post, but something I feel very strongly about.


    When Osbourne chose to implement this change, I was horrified, it was unfair on every level


    Child benefit should either be universal or means tested, this half baked tie into the tax system.... I'm in danger of ranting again.


    I decided I would be claiming it and keeping it. I earn circa 70-80K per year and simply dump into my pension all the money that would incur 40% tax (the maximum you can put in is 40K), paying into a pension also reduces the gross amount I earn to under 50K so keeping child benefit. My wife also earns similar amounts and I on her behalf do the same.


    Net impact - pension for both us grows very swiftly, we keep the Child benefit, tax man loses an awful lot of 40% revenue (42% as we salary sacrifice and duck 2% NI + company ducks 13.8% NI).


    In short we each earn between 45-50K that's the artificial limit, the only fly in the ointment I am clearly going to breach the pension lifetime limit and it's looking like she will as well. Still we can fix that by retiring early before it happens.


    I tell them on our tax returns every year in the hope that someone will sort this rubbish out, so far they don't seem bothered. I would suggest as many of you who can do the same!
    • HappyHarry
    • By HappyHarry 10th Sep 18, 12:03 PM
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    • 1,103 Thanks
    HappyHarry
    So you can't provide a clear explanation. Thanks for your worthwhile input.

    BTW its a charge, not a tax. You may like to remember that before posting sanctimonious replies that offer nothing.
    Originally posted by brianfly
    You didn't ask for a clear explanation, indeed, you seem very clear on the workings of this charge.

    You asked
    However if someone can clearly explain how this scenario is fair then I am all ears.
    I doubt anyone could justify the fairness of this.

    Pennywise, who is a wealth of information on tax, and has helped countless posters on these boards, has provided a comment and a way of remedying the "unfairness". A brief "thank you" would be the normal response.

    These boards tend to be suitable for posters looking for information. If you're posting looking for sympathy for your position, and lots of "oh it's soooo unfair" type comments, then perhaps mumsnet might be better for you?

    (I know that I am ignoring the "please be especially nice" to new posters warning in this instance, but I think its acceptable this time).
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
    • sheramber
    • By sheramber 10th Sep 18, 1:07 PM
    • 5,214 Posts
    • 3,891 Thanks
    sheramber
    So you can't provide a clear explanation. Thanks for your worthwhile input.

    BTW its a charge, not a tax. You may like to remember that before posting sanctimonious replies that offer nothing.
    Originally posted by brianfly
    It is a tax charge https://www.gov.uk/child-benefit-tax-charge
    You may have to pay a tax charge, known as the ‘High Income Child Benefit Charge’, if you have an individual income over £50,000 and either:
    • xylophone
    • By xylophone 10th Sep 18, 4:42 PM
    • 26,484 Posts
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    xylophone
    http://paullewismoney.blogspot.com/2012/11/child-benefit-high-income-charge.html

    The rules are complicated and may seem illogical and unfair.


    I think I'd change that to "are" illogical and unfair and indeed (although personally unaffected by the legislation), I did write to my MP to express my view, pointing out that other means tested benefits are based on household income - many other people no doubt did the same and received replies trotting out the party line.


    As for it not applying to you at the time, legislation is like that - at a certain point you don't drive a car/rent out a house/ have any capital gains etc so the rules pass you by like the idle wind you regard not.... but when you do, it is up to you to check on your position vis a vis those rules.
    • Dazed and confused
    • By Dazed and confused 10th Sep 18, 9:54 PM
    • 2,907 Posts
    • 1,418 Thanks
    Dazed and confused
    Brianfly

    The letter I received was pretty fair and stated that I may not be charged penalties etc and i have no issue with paying back the money if we are not entitled to it, however I just wanted to understand the process for repayment that others have followed. I also understand that this isn't a 'tax', however I am PAYE so can this be repaid using tax code re-calculation? We are talking upwards to £5.5-£6k once all the years are calculated and that is simply not an amount of money we just have lying around, its not like we have been hoarding the CB money and accruing all the interest
    In this situation paying it back through a lower tax code isnt going to be an option but if you file your 2017:18 Self Assessment return by no later than 30:12:2018 then it may be possible for your total self assessment liability for 2017:18 (which includes the High Income Child Benefit Charge for that year) to be collected through your 2019:20 tax code.

    You would also have to owe less than £3,000 for 2017:18 for this to be possible.
    • badmemory
    • By badmemory 11th Sep 18, 3:23 AM
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    badmemory
    It may be unfair, well not may it obviously is, but it is the tax law unfortunately. Do we really want to go back to the time when a woman's earnings could push her spouse into another taxation bracket? Although I did enjoy my ex's £1000 tax bill caused by my self employed (& obviously meaningless pin money income). Didn't enjoy the non-payment of child maintenance to compensate much though but every upside has its downside. I counted it a win.
    • stevedresden
    • By stevedresden 11th Sep 18, 12:49 PM
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    stevedresden
    I just got off the phone to the HI-CBC advisor at HMRC and all I can say to anyone in the same position as those of us receiving the letter is - ring them, be polite and make it clear that you knew nothing about the charge, but that you want to sort the situation out



    The guy was really helpful and explained everything in very simple terms. We didn't discuss the "fairness" - it's clearly a hugely flawed plan, but it is what it is and there is no option not to pay (unless you enjoy prison food !)


    What he told me is of interest, so I will repeat it here
    SEPTEMBER 2018


    There are tens of thousands of people in this daft situation where they were not impacted in 2013 when the rule came in (because they either didn't have kids or were earning under the threshold) - and now don't realise that they owe this money back to HMRC because their situation changed.


    The purpose of the latest batch of letters is to try and deal with that situation in the most straight-forward manner that doesn't involve any kind of legal threat or challenge and maximises the tax take for HMRC



    Basically they are NO LONGER imposing penalties on any charges from previous years if you are honest and say you had no idea about the ruling or that you owed the money. That's great news for me, as the penalty was the bit I was worried about (normally 20%)


    I feel a bit sorry for anyone who has already paid up in the past and also been charged the penalty, but going forward it looks like the government have realised it's not helpful to impose the penalty and get caught up in legal wrangles. Scrap the penalties and let people just settle up. (essentially a penalty amnesty in place, so now is your chance)

    If you owe a lot for the tax years 2013-2017 then you have the option of setting up a payment plan. That involves paying a deposit and then monthly payments thereafter. I don't know the terms as I'm not at that stage yet (you have to wait for the bill to arrive before you negotiate that - but it's an option on the phone line to talk to a separate advisor)


    If you owe for the 2018 tax year, then they will register you for self-assessment and you have to complete that before the deadline in Jan 2019 and then they will alter your tax code going forward until you have paid off the charge for that year via PAYE


    Bottom line is that no one should be looking at a massive one-time payment if they simply don't have the money to hand. They want to help you manage the debt



    You only have to self-assess in future tax years if your P60 shows £50k+ of taxable income. If you earn less (as I will in 2019) then you don't have to self-assess that year
    • dori2o
    • By dori2o 15th Sep 18, 12:26 PM
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    dori2o
    I just got off the phone to the HI-CBC advisor at HMRC and all I can say to anyone in the same position as those of us receiving the letter is - ring them, be polite and make it clear that you knew nothing about the charge, but that you want to sort the situation out



    The guy was really helpful and explained everything in very simple terms. We didn't discuss the "fairness" - it's clearly a hugely flawed plan, but it is what it is and there is no option not to pay (unless you enjoy prison food !)


    What he told me is of interest, so I will repeat it here
    SEPTEMBER 2018


    There are tens of thousands of people in this daft situation where they were not impacted in 2013 when the rule came in (because they either didn't have kids or were earning under the threshold) - and now don't realise that they owe this money back to HMRC because their situation changed.


    The purpose of the latest batch of letters is to try and deal with that situation in the most straight-forward manner that doesn't involve any kind of legal threat or challenge and maximises the tax take for HMRC



    Basically they are NO LONGER imposing penalties on any charges from previous years if you are honest and say you had no idea about the ruling or that you owed the money. That's great news for me, as the penalty was the bit I was worried about (normally 20%)


    I feel a bit sorry for anyone who has already paid up in the past and also been charged the penalty, but going forward it looks like the government have realised it's not helpful to impose the penalty and get caught up in legal wrangles. Scrap the penalties and let people just settle up. (essentially a penalty amnesty in place, so now is your chance)

    If you owe a lot for the tax years 2013-2017 then you have the option of setting up a payment plan. That involves paying a deposit and then monthly payments thereafter. I don't know the terms as I'm not at that stage yet (you have to wait for the bill to arrive before you negotiate that - but it's an option on the phone line to talk to a separate advisor)


    If you owe for the 2018 tax year, then they will register you for self-assessment and you have to complete that before the deadline in Jan 2019 and then they will alter your tax code going forward until you have paid off the charge for that year via PAYE


    Bottom line is that no one should be looking at a massive one-time payment if they simply don't have the money to hand. They want to help you manage the debt



    You only have to self-assess in future tax years if your P60 shows £50k+ of taxable income. If you earn less (as I will in 2019) then you don't have to self-assess that year
    Originally posted by stevedresden
    That's not quite correct for all cases.

    If all you have is a basic salary then yes, just check the income on the P60.

    If you also have Employer Benefits/Benefits In Kind (company car/medical insurance etc) then it's the total of the income on your P60 plus the total value of your benefits in kind.

    Furthermore, if you have other taxable income then you also need to add this income as well.
    To equate judgement and wisdom with occupation is at best . . . insulting.
    • Dazed and confused
    • By Dazed and confused 15th Sep 18, 12:29 PM
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    Dazed and confused
    And filing the return after 30 December will prevent any HICBC (or other tax) due for 2017:18 from being collected via the PAYE tax code.
    • dori2o
    • By dori2o 15th Sep 18, 2:28 PM
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    • 12,910 Thanks
    dori2o
    And filing the return after 30 December will prevent any HICBC (or other tax) due for 2017:18 from being collected via the PAYE tax code.
    Originally posted by Dazed and confused
    Missed that bit. Quite right.
    To equate judgement and wisdom with occupation is at best . . . insulting.
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