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Idiots guide to child benefit changes please!

(75 Posts)
bangersmashandbeans Mon 03-Dec-12 16:31:15

My husband earns just over 50k but with bonuses etc it is over 60k. Can someone please explain what we do about child benefit when it changes in January? It is calculated on 'adjusted net income' - what does this mean?! Is it the figure after pension contributions but before income tax and other taxable deductions? Have looked on various websites but can't make sense of it. Thanks!

vj32 Mon 03-Dec-12 19:09:32

Don't do anything. Keep claiming. HMRC will claim it back after your DH does his tax return.

bangersmashandbeans Mon 03-Dec-12 19:34:13

He's on paye so doesn't do one?

ihategeorgeosborne Mon 03-Dec-12 20:44:53

I believe adjusted net income is taxable income less certain tax reliefs, i.e. pension contributions, charitable donations, etc. We are in the same situation, as dh is PAYE, but I believe they will now have to start filling in a tax return and including that their spouse claims child benefit for X kids. Having said that, dh hasn't received his letter yet!

Ponders Mon 03-Dec-12 20:49:50

'Adjusted net income is calculated in a series of steps.
The starting point is “net income” which is the total of the individual’s income subject to income tax less specified deductions, the most important of which are trading losses and payments made gross to pension schemes.
This net income is then reduced by the grossed-up amount of the individual’s gift contributions and the grossed-up amount of the individual’s pension contributions which have received tax relief at source.
The final step is to add back any relief for payments to trade unions or police organisations deducted in arriving at the individual’s net income.
The result is the individual’s adjusted net income.'

from hmrc document

it is possible to cut your adjusted net income below the threshold by increasing pension payments.

does your DH get any benefits though? (eg company car, health insurance?) only those are added on

Ponders Mon 03-Dec-12 20:52:50

'the grossed-up amount of the individual’s pension contributions which have received tax relief at source'

means that if he pays eg £80pm into a pension, that's the net amount, & the grossed-up amount (ie before tax at 20%) is £100

bangersmashandbeans Mon 03-Dec-12 21:06:37

Okay...so in laymans terms I look at his payslip, take the figure after tax and pension but before car and other benefits are deducted and then add the pension plus 20% back on? Sorry if I sound stupid!

Lonecatwithkitten Mon 03-Dec-12 21:19:56

His P60 should make it all clearer as this will show his taxable income.

Ponders Mon 03-Dec-12 21:20:30

if he has a car & other benefits as well, then his gross income is actually even higher.

HMRC deduct a taxable value for those from his basic tax code in order to make him pay more tax; you need his tax coding notice to find out what those taxable values are, then add those to his gross income, & deduct his pension contributions plus 25% (sorry, it is confusing! His contributuons represent 80% of the gross-up amount, so to work that out you have to divide his contributions by 4 & multiply by 5)

it sounds as if you probably will lose the net value of your child benefit from his taxable income; but it's important to you to keep claiming it anyway as it gives you credits towards your future pension - another hmrc link

Ponders Mon 03-Dec-12 21:23:26

the latest P60 is for the 11-12 tax year though, & the one for 12-13 won't be available until May or June? (some time after April anyway)

but if his earnings for both years are roughly comparable, bangers, then last year's P60 will help.

bangersmashandbeans Mon 03-Dec-12 21:32:08

And the sodding government are expecting us joe bloggs normal people to be able to work this out?! Are they fecking serious??!! I consider myself quite a bright well educated person and my head is in a spin! Thank you all for trying to explain it to me though. Don't get why they are trying to change it from
January when it make so much more sense to do it starting from the next financial year? Due to bonuses etc last years P60 won't reflect this years earnings at all. confused

ihategeorgeosborne Mon 03-Dec-12 21:32:51

It might be worth paying £100 or so to see a tax accountant? If you are well over the threshold, i.e. above 60k, then it is probably not worth trying to salvage it. However, if your net adjusted income brought you down to say mid fifties, then it might be worth looking into other options. It obviously depends on how many dc you have too. If you have 2+ then it might well be worth looking into this. We have decided to just take the hit next year as we will lose about 60% for three months. However, next year, dh will pay more into his pension, as 60% of 2.5k is actually quite significant.

Ponders Mon 03-Dec-12 21:41:50

s'bloody Gideon, innit. He loves to confuse & he will have access to top accountants 24/7. Bastard

ihategeorgeosborne Mon 03-Dec-12 21:45:15

Well, it has to said, "I hate George Osborne", but I expect you can probably tell!! grin

bangersmashandbeans Mon 03-Dec-12 21:49:32

It's just such a nonsense how complicated they make it. Why can't it just be that if you earn over x amount you get nothing. I have no issue with it being looked at because it's crazy that everyone gets the same at the moment whether you're a gazzilionaire or not but they make it such an unworkable system. I swear they are all aliens in that bloody government.

ihategeorgeosborne Mon 03-Dec-12 21:51:09

I wonder what goodies he'll have in store for us in his Autumn budget on Wednesday? I live in dread of his budgets. There's not much left he can take from us now apart from tax relief on pensions, NHS and schools!!!!

purpleroses Mon 03-Dec-12 21:52:29

If you're unsure of his precise earnings, and it's possibly it will be a little under £60,000 (eg if the amount of the bonus is not certain) then it's best to go on claiming CB, and have him pay it back. He may not have to pay it all back. A self-completion tax return is really quite simple to fill in if your earnings are all from your job, and the HMRC can answer questions on it if he has any problems.

I think you might also want to see if he could pay more money into a pension, as that would increase the child-benefit you get.

Ponders Mon 03-Dec-12 21:53:35

what's worst of all is that they've made it individual income, not family - OK they've raised the threshold (a bit), & introduced a sliding scale (a bit), but the fact remains that a 2x £45K income family will be unaffected.

(NB this is not personal - my kids are all over 18. Still makes me cross, though)

ihategeorge, you must have been surprised that name was available grin

ihategeorgeosborne Mon 03-Dec-12 21:58:21

I'm sure they will find out in time that it is unworkable as it currently stands, but for now they will plough on with it. I wouldn't be surprised if they don't revise it a year or so down the line, particularly when HMRC are inundated with 500,000 extra tax returns. I expect the cock-ups relating to this will be wide spread and in the news constantly. Still, they were warned and chose not to listen. It should all blow up in time for May 2015 grin

bangersmashandbeans Mon 03-Dec-12 22:04:01

That's interesting about the pensions bit as from January his contributions are going up by about 4-5% so I guess we'll keep claiming and look at it again in feb/march. So sue me mr Osborne!

ihategeorgeosborne Mon 03-Dec-12 22:04:59

Ponders, yes I was surprised!! This policy aside, the man really gives me the creeps and scares me TBH.

MrAnchovy Tue 04-Dec-12 03:16:46

Why can't it just be that if you earn over x amount you get nothing.

Because then you would have the ridiculous situation where if you earned X less £50 and got a £100 pay rise you could be thousands of pounds worse off.

Not all pensions work the same way BTW - and if your DH's pension works the way that Ponders described you are throwing away hundreds, possibly thousands, of pounds in tax relief each year by not filling in a tax return (25% of his total pension contributions for the year).

See an accountant.

bangersmashandbeans Tue 04-Dec-12 07:38:30

Mranchovy if I had access to an accountant without it costing me money would I really be asking mumsnet for financial advice?!

TheDoctrineOfSnatch Tue 04-Dec-12 07:57:04

Bangers an accountant would be likely to save you. Money!

Can you confirm: are the pension contributions you mention made by your DH or his employer?

MoreBeta Tue 04-Dec-12 08:13:09

The most important message is keep claiming your family allowance even if you or spouse are over earning threshold.

I read a thread a while ago on MN that if a non working SAHM doesnt keep claiming Child Benefit you will not be credited with your NI stamp.

Many women will stop claiming in the mistaken belief they cant claim Child Benefit now because their DH earns 'too much' and not realise they are damaging their future state pension. What they should do is keep claiming and then sort it out later via DHs tax return.

Can anyone confirm this?

bangersmashandbeans Tue 04-Dec-12 08:31:24

I've heard that as well but my issue with that is that surely then you get a 'bill'? That is what I'm trying avoid as we'll be down to one wage by then.

The pension contributions are pretty standard corporate pension ones where X amount is taken from DH and company contribute X amount.

BlingBubbles Tue 04-Dec-12 08:48:15

OP you could be me smile my DH also earns about 50k and then with bonuses around 60k, I am slightly concerned that we have not yet received a letter to say the child benefit is stopping..... All we need is a letter next year asking for it all back!

Ponders Tue 04-Dec-12 08:49:13

MoreBeta, confirmation for you

MoreBeta Tue 04-Dec-12 10:12:50

Ponders - thank you.

Do look at the link above in Ponders' post everyone. It is really important.

"How claiming Child Benefit can protect your State Pension"

GeraldineMumsnet (MNHQ) Tue 04-Dec-12 12:09:16

Hello, our content page on child benefit changes hopefully answers some of your questions.

TheDoctrineOfSnatch Tue 04-Dec-12 17:14:23

Bangers you could put the CB in savings as you receive it, then it will be there to pay the bill.

Bling if your DH doesn't get paid his bonus until Jan-Mar, it's possible HMRC haven't picked up on the need to send you a letter as on current earnings you wouldn't be over the threshold for 2012-13 tax year.

MrAnchovy Tue 04-Dec-12 17:36:36

The pension contributions are pretty standard corporate pension ones where X amount is taken from DH and company contribute X amount.

Without seeing the payslip, P60 or pension statement it is impossible to tell whether your DH is entitled to claim back 25% of (the second) X.

MrAnchovy Tue 04-Dec-12 17:38:54

Bling if your DH doesn't get paid his bonus until Jan-Mar, it's possible HMRC haven't picked up on the need to send you a letter as on current earnings you wouldn't be over the threshold for 2012-13 tax year.

HMRC have no idea what anybody's current earnings are so the letters are based on last year's earnings. But the obligation is on you to declare this even if you don't get a letter - HMRC will find out in May how much you earned through PAYE in 2012/13 and will catch up with you then.

MrAnchovy Tue 04-Dec-12 17:49:29

"The most important message is keep claiming your family allowance even if you or spouse are over earning threshold."

It hasn't been called family allowance for decades.

"I read a thread a while ago on MN that if a non working SAHM doesnt keep claiming Child Benefit you will not be credited with your NI stamp."

It hasn't been called "NI stamp" for even longer.

"Many women will stop claiming in the mistaken belief they cant claim Child Benefit now because their DH earns 'too much' and not realise they are damaging their future state pension. What they should do is keep claiming and then sort it out later via DHs tax return."

I don't think they will: the letter, the CB claim form and the HMRC web site are all pretty clear that you can still claim eligibility for CB whilst disclaiming receiving it.

Nevertheless my advice, in line with most other advisors, is to keep claiming it not because it is the only way to protect your basic state pension, but because you get to keep the cash in the bank and if for any reason you start becoming entitled to all or part of it again you don't have to do anything or wait for it to be sorted out - and given that the circumstances leading to that situation are redundancy, separation or bereavement you really don't want uncertainty or delay.

bangersmashandbeans Tue 04-Dec-12 20:56:38

Trust a bloody mumsnetter to get manage to get snipey over the simplest and least controversial of threads! Wrong side of bed MrAnchovy?!

MrAnchovy Tue 04-Dec-12 21:07:54

Could have done with a few grin wink smiles I suppose, but I can be much grumpier than that!

Sorry if I have offended you.

ihategeorgeosborne Tue 04-Dec-12 21:08:20

MrAnchovy, do you work for HMRC by any chance?

bangersmashandbeans Tue 04-Dec-12 21:17:16

Not offended just bemused at how vexed you seem! wink

MrAnchovy Tue 04-Dec-12 21:17:33

MrAnchovy, do you work for HMRC by any chance?

shock now that would make me REALLY grumpy!

ihategeorgeosborne Tue 04-Dec-12 21:43:46

Sorry, hope I didn't offend you. You have always been very helpful to me on these threads. Just wondered as you seem to know so much about all this and how HMRC works smile

TheDoctrineOfSnatch Tue 04-Dec-12 23:02:21

MrA I didn't think you seemed grumpy, just informative!

CogitOCrapNotMoreSprouts Wed 05-Dec-12 10:16:58

"And the sodding government are expecting us joe bloggs normal people to be able to work this out?! "

They expect people to start completing self-assessment returns. It's not as difficult as it sounds and there is very reasonably priced software available from places like TaxCalc to enable novices to complete and submit returns online. I seem to get a rebate most years.

So keep claming but, come next April/May when your DH gets his P60s,P11Ds and so on, submit the self-assessment

FinanceBore Wed 19-Dec-12 21:14:42

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legoballoon Fri 04-Jan-13 08:03:49

I though MrAnchovy was quite helpful actually.

To clarify one point - if an employee is getting mid £50k and paying a given percentage into a company pension, those contributions are going to be paid with 40% tax relief (as opposed to 25%, as deducted 'at source' means it would reduce the taxable amount of his or her salary).

So, unless your pension provider went bust, even if it only performs mediocrely (if that is an adverb), it's a far more effective way of long-term saving as you're effectively getting £140 for every £100 you save even before the money's invested.

So is that generally seen as the best way of reducing the 'adjusted net income' (assuming you can afford to)? With 2 kids, given that every thousand pounds you reduce your 'adjusted net income' over £50k saves you £175 (i.e. 10% of your CB), the annual return on an extra £1000 pension contribution is immediately £175, or 17.5% of that £1000, which is far better than anything you'd get in a savings account/bond. Plus your pension pot would increase.

Is that thinking right?

FamiliesShareGerms Fri 04-Jan-13 08:22:01

We opted to tick the box to stop receiving the CB payment, but still "claim" CB. This means DH still gets the credits towards his pension if he is out of work in the future, but we don't have to worry about being paid the money then handing it all back again via self-assessment

The good news is that the online form is really simple to complete if you have your NI and CB number - it literally took three minutes. (No acknowledgement email or any other audit trail to say that it has been accepted / processed, mind....)

CogitoErgoSometimes Fri 04-Jan-13 08:39:08

"And the sodding government are expecting us joe bloggs normal people to be able to work this out?! Are they fecking serious??!! "

The 'sodding government' are expecting you to submit a tax return. I'd recommend he does that because I think he's missing out. For example, he's only getting 20% tax relief on his pension contributions at the moment when he could actually get 40%... so he's missing out. If he makes any charitable contributions he could get the tax back on those. Lots of people are paying too much tax and never realise until they go self-assessment.

Can highly recommend spending £25 or so on a personal taxation package called 'TaxCalc'. Makes calculating tax and submitting returns very simple. You may gain rather than lose.

CogitoErgoSometimes Fri 04-Jan-13 08:40:54

<Seem to have repeated myself... apologies>

Uppermid Fri 04-Jan-13 09:01:10

Maybe I'm missing something somewhere but how much money do the government really think they are going to save?? The amount of extra work this has created is unbelievable. Surely much money money would be generated by changing rules and ensuring that companies pay the tax that they should

I can see why £60k is seen as a good marker, but because they're getting away with this, how long before they bring to amount down?

I would like to thank mumsnet though for their explanation in English!!

lottie63 Fri 04-Jan-13 10:27:22

Marking place

MrAnchovy Fri 04-Jan-13 13:30:21

it's a far more effective way of long-term saving as you're effectively getting £140 for every £100 you save even before the money's invested.

There are various ways of paying pension contributions. The most advantageous is salary sacrifice, which means you get relief from NI (as does your employer) as well as Income Tax. If you sacrifice £1,000 of salary your net pay will decrease by £580 which is a little over £172 into your pension for every £100 reduction in net pay.

If your pension contributions are simply deducted from gross pay then for £1,000 pension contributions your net pay will decrease by £600 which is over £166 into your pension for every £100 reduction in net pay.

And if your pension contributions are deducted from net pay with the pension provided claiming 25% (THIS IS A COMMON ARRANGEMENT AND IF IT APPLIES TO YOU YOU MUST COMPLETE A TAX RETURN OTHERWISE YOU ARE THROWING AWAY £THOUSANDS), if you make a net contribution of £800 your pension provider will claim back £200 and you can claim back £200 through your tax return so again you get over £166 into your pension for every £100 reduction in net income.

The savings for upper rate taxpayers are proportionately higher.

So, unless your pension provider went bust

Pension funds are ring-fenced so they are not materially affected by the provider going bust. Note however that there will be charges which apply on funds entering and/or exiting the scheme as well as annual charges, and if there is a collapse in the value of the underlying investments you may lose money.

So is that generally seen as the best way of reducing the 'adjusted net income' (assuming you can afford to)? With 2 kids, given that every thousand pounds you reduce your 'adjusted net income' over £50k saves you £175 (i.e. 10% of your CB), the annual return on an extra £1000 pension contribution is immediately £175, or 17.5% of that £1000, which is far better than anything you'd get in a savings account/bond. Plus your pension pot would increase.

Yes. So the reduction in your net income for the £1,000 pension contribution becomes £600 - £175 = £425 - an initial return of 135%! And that's with only 2 children, if you have 4 that becomes 250%.

Looking at it another way your marginal tax rate is 57.5%. For someone with 4 children it becomes 71.5% (and yes, if you are a claiming CB for 9 children it actually goes over 100% so the more money you earn, the less you take home).

legoballoon Fri 04-Jan-13 14:22:23

Thank you MrAnchovy for confirming my thoughts. As a non-financial sort of person, it's good to get some feedback from someone who sounds like they know the system (although this being t'internet, you could be George Osborne and the head of the HMRC's love child, and we'd be none-the-wiser wink).

CogitoErgoSometimes Fri 04-Jan-13 14:49:51

"how much money do the government really think they are going to save?? "

HMRC have been trying to encourage people to go self-assessment for a long time because it's cheaper to administer. If this means many more taxpayers start submitting their own returns, it'll be a winner. The first year there will be extra costs that don't apply subsequently. So far I've only had one letter and that can't cost much.

MrAnchovy Fri 04-Jan-13 15:27:55

Maybe I'm missing something somewhere but how much money do the government really think they are going to save?? The amount of extra work this has created is unbelievable.

Surely much money money would be generated by changing rules and ensuring that companies pay the tax that they should

NO

It's that kind of thinking that got us into the Child Benefit mess in the first place.

Consider this:

The "old" system of child benefit was simple to undersand and cheap to administer. It was a little bit unfair, because some people earning really rather a lot of money received it, and so everyone had to pay a tiny bit more tax.

Up jumps a politician, presumably trying to curry favour with those that stand to his political left, and shouts "this is unfair, I will stop it".

So we end up with a system that is complicated to understand, costs a large amount to administer (forget the additional costs in HMRC - the compliance burden on us, the taxpayers, has not even been taken into account), introduces a number of unexpected side effects (the tax reclaims from those filling in tax returns for the first time and finding they have £thousands in unclaimed pension contribution refunds) and instead of being a little bit unfair on a large number of people is very unfair on a smaller number (e.g. those with earnings between £50k and £60k who have extortionate marginal tax rates; those with two earners on £50k who escape the charge altogether).

Thankfully it seems that after this, the "pasty tax" and other bad decisions made against the advice of people who know what they are talking about and don't have a political axe to grind, the leaders of the current administration are being a little more circumspect regarding the political temptation to join in the Corporation Tax lynch mob, joining in the chorus of "hang 'em high" rather than carrying the rope.

This is just as well - so far we have only cocked things up for a few people with kids they can afford to feed a higher-than-ambient-temperature pastry-based savoury snack from time to time. Do the same damage to Corporation Tax and you risk cocking things up for the companies that sell the products and employ the people that generate the VAT, Excise Duty, Income Tax, and National Insurance that make up nearly 70% of the UK's total tax income.

MrAnchovy Fri 04-Jan-13 15:31:44

although this being t'internet, you could be George Osborne and the head of the HMRC's love child, and we'd be none-the-wiser

I think my last post should help dispel that idea grin

MrAnchovy Fri 04-Jan-13 15:54:24

Oh by the way, just wait for the release of the following cock-ups currently in the final stages of production:

RTI (Real Time Information) - coming to a payroll department (or family with a nanny) near you on the first payday in April.

Universal Credit - the transitional provisions mean that noone should be financially worse off when it is introduced - if it works. Unless you are self employed of course because they have invented a whole new method of accounting for you to use - which started off insane, has now been modified to merely useless but will never do the job it is intended to because, the accounting system we use In Real Life is the way it is because not everyone's profit can be measured by the amount of money that goes into the bank that week.

Compulsory Pensions for small employers - is it really worth setting up a scheme with contributions of £5 a week?

<looses will to go on...>

MrAnchovy Fri 04-Jan-13 16:17:27

Since you mentioned the head of HMRC, you may be interested to know that this is Lin Homer who was previously head of the UK Border Agency and its predecssor within the Home Office. Her time there (2005-11) was not entirely without cock-up so we are in experienced hands.

notcitrus Fri 04-Jan-13 16:40:37

When people upthread say 'keep claiming', could someone confirm that means 'do nothing at all and the money will keep arriving in your bank account'?, and that I don't actually need to do anything to keep claiming?

And presumably MrNC's already-complex tax return will now have a question about whether anyone in the household is claiming CB relating to children of his?

Haven't received any letters at all.

MrAnchovy Fri 04-Jan-13 17:04:16

When people upthread say 'keep claiming', could someone confirm that means 'do nothing at all and the money will keep arriving in your bank account'?, and that I don't actually need to do anything to keep claiming?

Yes.

And presumably MrNC's already-complex tax return will now have a question about whether anyone in the household is claiming CB relating to children of his?

Actually he will need to put the amount of CB received - bearing in mind that the chargeable amount is for exactly 13 weeks in 2012/13 and 52 weeks in 2013/14.

aaaaaaaaaargh Mon 07-Jan-13 16:13:10

Ooh, can I parachute in and ask a question. I am lucky enough to earn about 53k, but reduced by pension contributions (I have no idea what kind of system but they're deducted before tax in our PAYE system) of around 4k I think.

I also earn a bit of income via a rental property but we haven't had to submit a self-assessment form as we've only made a loss or tiny gain of a few tens of quid (offsetting mortgage interest, fees etc) so far and we're supposed to have, er, notified HMRC and had our PAYE adjusted blush. That's, er, still on my to do list..

So without the additional rental income, I'd probably just fall under the threshold which is why I haven't received a letter presumably; but if properly notifying said taxman, I'm better off going for self-assessment now right?

aaaaaaaaaargh Mon 07-Jan-13 16:17:51

And, on the HMRC website the question do you earn more than your partner has three options: yes, no, don't know.

In my case there is a fourth. I earn EXACTLY the same as my partner. I know this is unlikely but it is true as we're on the same point on a salary scale and our rental income is shared. So we should BOTH be liable for half of any tax repayment, surely? Ha ha, will it just ANNOY HMRC if I ask them this...?

CogitoErgoSometimes Mon 07-Jan-13 17:31:31

"I'm better off going for self-assessment now right?"

If you're making pension contributions and you are in the 40% tax bracket, almost certainly yes because you can get extra tax relief on those contributions. Same goes for your partner. I wouldn't try asking HMRC to do anything tricky just to make a point. If you get the payment and you earn above the threshold, put the CB on your tax return.

MrAnchovy Mon 07-Jan-13 19:05:48

In my case there is a fourth. I earn EXACTLY the same as my partner. I know this is unlikely but it is true as we're on the same point on a salary scale and our rental income is shared. So we should BOTH be liable for half of any tax repayment, surely? Ha ha, will it just ANNOY HMRC if I ask them this...?

I was wondering when someone was going to ask this grin In fact the way the legislation is drafted, in theory you are BOTH required to pay the full charge. HMRC would obviously not apply this in practice, but as the mechanism doesn't exist to split the charge I would imagine they would just accept your election as to which one should pay it. Probably best to both declare the situation on your tax returns though.

MrAnchovy Mon 07-Jan-13 19:07:49

If you're making pension contributions and you are in the 40% tax bracket, almost certainly yes because you can get extra tax relief on those contributions.

Not if they are deducted from gross pay, which is stated to be the case. Probably some professional subscriptions, gift aid, underpaid mileage, uniform etc. to claim though.

pepperrabbit Mon 07-Jan-13 19:58:23

I really don't understand the pension element.
DH has a salary of £65k, he's on PAYE.
He salary sacrifices £300 pm for childcare vouchers (has done for years) He also makes salary sacrifices for Food shopping vouchers of £300pm and for medical cover £110 pm. GAYE for the year is £400 in total.
I am assuming only the childcare vouchers count here to reduce net eligible income? And possibly only £243 of that as that's the tax free bit?
His pension shows twice on his payslip as both a positive and negative figure of the same amount underneath his "basic salary" line.
Does that mean it is ineligible to be deducted?
This makes the difference to us between dropping into the 50-60 bracket or not. confused
I haven't opted out, as I'm so confused. I figure on waiting till April, seeing what it looks like then and opting out then if necessary

MrAnchovy Tue 08-Jan-13 02:26:03

ALL (effective) salary sacrifices by definition reduce Gross Income by definition, and therefore Adjustable Net Income. However the BENEFIT you get in return for the salary sacrifice may itself be taxable, in which case it will be reported on a P11D and will increase ANI. Shopping vouchers and private health cover are almost certainly taxable benefits, as are childcare vouchers in excess of the eligible limit.

Different payrolls show pension contribtions in different ways: if they are salary sacrifice they don't need to show on the payslip atall so don't lose sleep over it.

You have now missed the deadline to elect not to receive CB for this week (the first week of the charge) anyway, so your husband will need to inform HMRC that he needs to complete a tax return for 2012/13.

pepperrabbit Tue 08-Jan-13 12:57:45

Thanks MrA that makes more sense.
Do you often answer tax questions at 2am?! grin

MrAnchovy Tue 08-Jan-13 13:01:41

"Do you often answer tax questions at 2am?!"

In January, yes grin

pepperrabbit Tue 08-Jan-13 13:06:06

Always nice to be popular. grin

Sab122 Thu 09-Jan-14 15:01:39

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kittywhinge Tue 14-Jan-14 14:22:42

I'm a bit late to this issue. Have only lately stopped CB and now have been told I need to fill in Tax Self Assessment to pay back over-payments. I earn circa 20K, DH earns in excess of 70k. I was the one receiving CB - which one of us does the SA - does it matter? He already does SA, I'm PAYE? Am totally confused by all this (I consider myself to be averagely intelligent but am utterly confounded) have tried phoning HMRC but still don't fully understand, but they say he should do it. He's already sent in his SA and says his accountant (Financial Advisor?) has told him I should do it as he pays higher tax, so we keep going round in circles. Deadline is fast approaching - fines have been threatened and I don't know what to do. Anyone else in a similar situation and understands or am I the only one in this particular heap of doo-doo??

Bellie Tue 14-Jan-14 15:16:12

Coming late to this too, but can I also ask a question (apologies if already been covered)

I was a SAHM until August 2013. My salary is less than £20,000 pa.

My ex left in February 2012. Divorce came through in July 2013. I have continued to receive the CB for all this time. He earns WAY more than the threshold, but I am the one that has been receiving the CB.

Do I have to do something? Does he have to do anything?

Have had my head in the sand over this and just heard a radio ad at lunchtime and having a slight panic.

TIA

TarkaTheOtter Tue 14-Jan-14 15:32:01

So much misinformation about national insurance credits on this thread and when mranchovy pointed it out he was asked if he was an employee of hmrc confused

You do not have to receive CB to get your NI credits - you just have to claim. The form is actually quite straightforward. You just have to tick a box to say you don't want to actually receive the payments.

TarkaTheOtter Tue 14-Jan-14 15:36:21

"If you or your partner have an individual income of more than £50,000
If you or your partner have an individual income of more than £50,000, you may be liable to a tax charge called the 'High Income Child Benefit charge'.
You may decide not to get Child Benefit payments, because you don't want to be liable to the tax charge. It's important to still fill in a Child Benefit claim form, even if you don’t want to get the payments. This is because if you are entitled to receive Child Benefit, you can still qualify for credits to protect your State Pension."

Link to hmrc website here.

And no I don't work for them either but as dh definitely earns above £60k pa (and is not financially abusive) this was my only consideration when choosing whether or not to receive the benefit.

Lexilicious Tue 14-Jan-14 19:27:09

MrAnchovy, I'm staggered that the legislation would have two earners between 50-60k BOTH pay back the child benefit! We are likely to be in that situation for 13-14 tax year. For some reason (probably CB) I have been summoned into doing a tax return for 12-13 although my income isn't in the higher rate band at all. (It might have briefly been a bit into higher rate the year before. They did a load of recalculating my tax code, I had a new one about every other week for a period of 2011.)

If I was higher rate and actually taking this years tax return seriously, I would have this question for you: do subscriptions to charitable organisations (e.g. English Heritage, Royal Horticultural Society) count as charitable donations? When I signed up for a direct debit annual membership they had a gift aid tick box, so they are getting the basic rate tax back from the Treasury. If I had paid HRT, would I get the other 20% back?

dannydyerismydad Wed 15-Jan-14 21:55:09

We've been continuing to claim CB as DH's basic salary is under the threshold. He usually gets a bonus that takes him over, but there's no guarantees as a bonus is a bonus, not a salary.

We've just done our self assessment forms, and despite HMRC clawing back our child benefit, what with pension relief and other tax reliefs, HMRC actually owes us over £300.

Had they not wanted to claw back CB, DH wouldn't have bothered filling in a tax return. I wonder how much the government will end up out of pocket over this nonsense.

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