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Is it worth your family still claiming CB if one of you is a higher rate taxpayer?

(33 Posts)
mamhaf Mon 15-Oct-12 22:19:18

I'm a higher rate taxpayer, and close to the limit of where we would receive no CB when the rules change in January, while DH is a lower rate taxpayer.

He has always been the claimant of CB which goes straight into a savings account in his name.

So, after the rules change in a direct reversal of the principles of independent taxation for couples, taking us back to the 1950s and when we both fill in our tax returns for 2012-13, Revenue & Customs will claim back most of the CB from me. I'm not sure if that'll be via my tax code (I'm PAYE) or if I'll have to pay it as a lump sum.

Any idea anyone?

Also, do you reckon it's worth DH still claiming CB and putting it in a savings account until it's time to pay up? The amount we'd have to pay back would be quite close to the amount claimed, but we would accrue interest on it.

All our salary goes into a joint account, so I'm not keeping him penniless btw, our income is pooled but he has no idea about budgeting and leaves it all to me.

gettingdarkoutside Thu 01-Nov-12 19:12:09

by the way, we aren't married if that makes a difference

scaevola Thu 01-Nov-12 19:29:06

"Any benefit received from the state ... is judged on a household basis"

That is however not what they are doing here. If it were on a household basis, then the situation where household X on £90k keeps CB in its entirety whilst household Y on £62k loses it entirely would not arise.

What is happening here is not a joint benefit. It is additional taxation on individual A based on individual B's sources of income.

I think it is wrong that individual taxation is being undermined with no proper consideration. Turning it genuinely into a joint means tested benefit would not alter the basis of personal taxation as this does. And it would be fairer.

gettingdarkoutside Thu 01-Nov-12 19:37:47

I think scaevola has answered my question... I should stop claiming, and my partner - who is not a higher rate taxpaper - should start claiming instead. I agree with scaevola really but want to get the best for my children and plan for the more difficult times ahead.

MrAnchovy Fri 02-Nov-12 16:51:48

@gettingdarkoutside from what you have said I can't see any point in your partner claiming instead of you. As long as he pays Class 2 National Insurance, as he is required to do if his self employed earnings are over £5,595 a year, he is getting full credit for the Basic State Pension. If either of you earn over £50k in any tax year, that person will start to have CB clawed back as long as one of you is receiving CB and you are living together.

I'd suggest you get an accountant though - an introductory half hour chat is likely to reveal a number of things that could be done to improve your tax position.

MrAnchovy Mon 05-Nov-12 22:07:55

Looks like I was right about Guy Fawkes, although it seems that HMRC have abandoned the idea of tax code amendment altogther. Better never than late then. Or something hmm

mamhaf Thu 08-Nov-12 15:19:49

Gettingdark - depending on your circumstances, you may not lose all your CB.

From what I can see, it's on net income, so pension or salary sacrifice could put you in the 50-60k bracket.

My dh has always claimed ours because I guessed something like this might happen.

I have just whacked up my pension contributions and am thinking about buying am extra week's leave, meaning we would keep most of the CB.

mamhaf Thu 08-Nov-12 15:21:13

And I should have set, if that does alter your position, then get your dp to claim instead of you.

CarolynKnappShappey Thu 08-Nov-12 15:52:56

NB that the magic letter states positively that NI status will not be affected by waiving CHB though I'm not sure how it works. I'm also not sure how easy it would be to reclaim if eg DP walks out or loses job, so in these uncertain times you might feel safer keeping up your claim and paying it back in tax just in case.

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