Mumsnet has not checked the qualifications of anyone posting here. Free legal advice is available from a Citizen's Advice Bureau, and the Law Society can supply a list of local solicitors.

Child benefit - do I cancel it?

(39 Posts)
LonelyLinda Wed 16-Jan-13 13:28:51

Could anybody advise me what to do please. My DH is over the tax threshold and I vaguely remember seeing something on here about pros and cons of keeping it or cancelling it, but I cant remember why.

could anybody explain it to me please? Sorry for being so vague.

CogitoErgoSometimes Wed 16-Jan-13 13:42:27

Most advice I've seen is 'keep it'. You'll keep getting the money and, if you don't need it, just put it in a savings account. When your DH fills out a self-assessment form later on in the year he should declare that the CB has been received and it'll be recouped ... possibly via his tax-code... at some stage after that. You might as well take advantage of the interest in the meantime.

If he earns over £60k (taking pension contribs into account) he'll have to pay it all back. But if he earns between £50 and £60k there's a sliding scale.

weegiemum Wed 16-Jan-13 13:45:19

My dh earns a good bit over the threshold but we've not cancelled.

It will be recouped from his tax.

In the interim we get the benefit of the interest and I'm not sure I trust the government when it comes to my home responsibilities payment so I'm keeping it just in case!

Toto110 Thu 17-Jan-13 13:09:29

The interest you will get on your cash will amount to next to nothing - on £83 paid monthly for 3months at for instance 3% (which is a high rate today) you will earn about £2 on which you may have to pay tax deducted at source.
On the other hand, what you are costing the country is much more as this will incur extra mailing costs (paper, ink, envelopes, postage, people to organise mailing, printers to deliver the mailing to the post office...) not to mention people to administer the claim. to cross match with affairs with your partner, checking into fraudulent individuals who try to get around this by hiding their combined worth...the list goes on.
200,000 people opted out in the first week and this made the Treasury estimate it had already saved 50% of the estimated administration cost of the scheme.
So to save taxpayers funding purely administrative costs instead of hospitals and education, and to help pay down the deficit - which your own children are set to inherit if we don't do anything about this - then please consider opting out asap as it is the decent thing to do.
Peer pressure on those who want to pocket a couple of quid at society's expense would be welcome.

we opted out as dh earns well over the threshold but didnt want to have to do a self assessment tax return.

CogitoErgoSometimes Thu 17-Jan-13 13:48:31

"then please consider opting out asap as it is the decent thing to do."

Decent hmm???!? A lot of PAYE taxpayers (myself included) find that, in the process of doing Self-Assessment, they are actually owed tax that they haven't previously claimed back. If you make private pension contributions, run a company car or make charitable donations you may find you are also due a rebate. HMRC love self-assessment because it saves them a lot of time and money.

ihategeorgeosborne Thu 17-Jan-13 14:14:54

Who are you Toto 110? George Osborne?? No, I will not opt out. Never in a million years will I make life easier for them. If they can't find a fair way to remove child benefit, i.e. letting families on joint incomes of up to 100k still be eligible for it then they deserve everything they get. Bring on the car crash!!!

CogitoErgoSometimes Thu 17-Jan-13 14:26:34

Toto110 isn't making a George Osborne argument... quite the reverse. Conservatives are usually quite keen for taxpayers to retain as much of our hard-earned cash as possible. He's suggesting that taxpayers should just overlook money they are owed as a public-spirited gesture and that to claim back a tax rebate is some kind of selfish act i.e. 'pocketing a couple of quid at society's expense'. After my last self-assessment HMRC had to give me back £400 that I'd overpaid. It's a drop in the ocean compared to the tax I've actually paid but, more importantly, it's my money and why wouldn't I want that back?

Toto110 Thu 17-Jan-13 14:28:51

Hi. I was a single parent from the time my son turned 3 months. I was also a student at the time, just starting on a two year course. My ex husband cleared me out in the divorce settlement as we went through it when he was jobless and just as my two year course ended and I managed to get a job ( I didn't want) that paid a good salary. My lawyer advised a clean break and pay-off as, unlike when a divorced woman remarries and becomes the responsibility of her new husband (so alimony stops) a woman's ex husband may remarry and neither of them work so I would have had to continue to pay, and for both of them. Life is tough, but being a parent is a big responsibility and when I look at the partner offers on this website I hardly feel there are that many mothers that badly off. The ones above say they partners earn more than £50K for instance. When I started on my own I couldn't afford clothes so I got hand me downs from other parents for my son and I stopped the gas and boiled kettles with electricity to fill a baby bath tub for my son - I went to school early to use the gymn showers. I appreciate poor is relative but even then I did not feel I was deserving of benefits and never sought to get them. Childbenefit was foisted on me. I believe being a person who is responsible enough to raise a child means you have to be responsible financially and full in charge of covering your child's costs. Otherwise why have them if you are3 looking to other tax payers to pay for them?
If more thought the same then the benefits bill would be dramatically reduced and really only the very needy would be recipients. There would be more for them too and more support instead of spreading the help so thin it makes little or no difference to most.
My father raised me to be an adult at 18 with nobody owing me anything. I have lived that way and saved every month I have earned so that rainy days are manageable.
Sorry to preach but to take money from others (taxpayers) that you can never say thank you to, show your gratitude to or pay back seems the wrong way for a society to hold together.

CogitoErgoSometimes Thu 17-Jan-13 14:34:24

We all pay thousands into the tax system over the course of our working lives and the idea is that we get the benefit of it back in the form of public services, a harmonious society and occasionally financial help when we need it.

So in your spirit of 'doing the decent thing' and never accepting any help will you be opting out of the education system? Saying 'no thanks' to healthcare? Do what you like but don't tell me I'm some kind of irresponsible drain on resources just because I choose to claim back a bit of tax... hmm

Toto110 Thu 17-Jan-13 14:41:48

I have always paid my child's private care whether child minders, au pairs, nannies, nursery school and school. I had no family living near me so every hour I spent away from my child at work or elsewhere cost me £10 in cover. I believe education is highly important so it is the best gift you can give your child and far more important than my having a car, than having 5 channels on my tv (we didn't until 2008), holidays (museums are free entry so that was our holidays). My company had me registered for private healthcare. So no I have not been a drain on other people in the UK. In return for my tax I get roads, street lighting, policing, rubbish collection, pest control, firemen, ambulances etc - basically everything I cannot provide efficiently myself.

CogitoErgoSometimes Thu 17-Jan-13 14:42:55

I've never heard such a load of pious crap in my life.

Toto110 Thu 17-Jan-13 14:44:26

I admit I must sound pious however imagine living in a country where everyone is popping out kids without budgetting the full cost and then ewxpecting pious, hard working people like me to pay without even a thank you! I think I have it harder

ihategeorgeosborne Thu 17-Jan-13 14:44:44

My husband pays nearly 20k a year in tax NI. I would have been happier to lose my child benefit if it was being removed from ALL families over a certain HOUSEHOLD income. The fact is, this is not the case and I am very cross. Why should my need for something be less than a family on nearly twice our income? For what it's worth, I was brought up in a poor family with very little money to go round. As a result of my upbringing, I am still very prudent now and always buy cheap / second hand where I can. I am definitely not 'entitled' and do not expect the 'tax payer' to pay for my children. My husband and I pay for our own children. I do, however, expect the government responsible for the running of the country to be able to implement FAIR policies.

CogitoErgoSometimes Thu 17-Jan-13 14:46:48

"I think I have it harder "

Because no-one comes knocking on your door to say thanks? hmm Gee, life must be one big disappointment to you....

Toto110 Thu 17-Jan-13 14:56:19

well I was brought up to believe that saying thanks makes all the difference and I avoid situations where I can't, that's all. I agree with 'ihategeorgeosbornes' comment that the removal of the benefit over a threshhold is unfair, just like the child trust funds that were introduced in 2000 and we missed by one year (my son being a 1999 baby).
What I find more worrying is that the Institute for Fiscal Studies says 7 million out of 14.1m working families will se a reduction in their benefits with the proposed freeze on increases to 1% (less than inflation).
How on earth can half the working families in Britain be on benefits? How did we get in this situation. It is not financially viable.
It is just an idea, and not really thought through, but perhaps the Govt could do away with all benefits and then focus the help on the poorest 5 or 10%, including those with debilitating conditions and vulnerable elderly etc. I would really like to see much more help channelled to these people.

CogitoErgoSometimes Thu 17-Jan-13 15:04:18

Whether to keep claiming CB when one partner earns more than £50k has very little to do with benefits any more. It's a taxable income issue. So the advice stands for anyone in the £50k-£60k bracket... keep claiming, file a self-assessment and, if necessary, pay some or all of it back. With the added bonus that they might get a tax rebate at the same time.

ihategeorgeosborne Thu 17-Jan-13 15:06:40

I agree, benefits should only be for those that really need them. People in work should be paying less tax and being allowed to keep more of their own money. Employers should pay a living wage too. The situation we are in is totally unsustainable, but NO government dares do this as they know it is electoral oblivion. They missed an opportunity with the child benefit changes. They could easily have made the cuts fairer by merging into tax credits. Instead they went for the more complex, very unfair, but doesn't affect many people (so our voting base should hold up) option. I guarantee they will regret this when it becomes clear that clawing back the money is not as straight forward as they'd hoped and also when they lose the election in 2015 it should sink in slowly that it may have been a mistake. Who knows? hmm

I cancelled my CB - both I and DH are over the threshold so no point receiving and then paying back. It saves admin for both HMRC, but more importantly for me too.

If you earn over £60k I would stop it, if you earn less I wouldn't.

Toto110 Thu 17-Jan-13 15:20:37

Yes, part of the problem is the working tax credits. All this has done is to enable employers to keep their wage bills artificially low. Employers should pay living wages and working tax credits be done away with.

AmandaPayne Thu 17-Jan-13 15:26:41

I asked this question a while ago and all the advice was not to cancel. Ignoring any moral debate on keeping the interest (which personally I think is fine since it is a perfectly legal course of action) the reasons were generally:

- if your circumstances change such that you re-qualify, it is likely to be a pretty earth shattering event, like your DH losing his job, dying, or leaving. At a time where that money could be a lifeline, it would be good not to spend time waiting for your request to be processed;

- lack of faith that the home responsibilities bit (or whatever it is called) will be properly administered if you are not earning yourself;

- the fact that, as a person who has only ever done PAYE, my DH may well be owed a fair bit of money by the tax man, which doing a return will flush out. a poster who was an accountant reckons it is very rare for people not to find out that they are owed money well into three figures.

AmandaPayne Thu 17-Jan-13 15:27:37

Oh, also bear in mind that, as I understand it, you have missed the deadline to stop it so will have to do a return this year anyway (think I have that right).

ihategeorgeosborne Thu 17-Jan-13 15:30:26

I like the sound of the tax rebate Amanda. We are in similar situation. DH is PAYE and will have to self assess for this. I don't understand though why he would get a tax rebate, as why would he not be paying the right amount of tax now? Also, (god forbid) what if it turns out that he owes them money?

AmandaPayne Thu 17-Jan-13 15:42:26

Unlikely he owes them money unless he has income from a source other than work I should have thought (though am no expert).

My thread was here. Things like gift aid sponsorship could add up quite fast - the charity claims back the basic rate tax and you can claim back the next chunk to take it to higher rate (assuming your charitable giving doesn't exceed the amount of higher rate earnings you have).

Groovee Thu 17-Jan-13 15:48:52

TOTO Child Trust Funds were introduced in March 2003 and backdated to September 2002 as ds was the only baby out of the 6 babies born that year in dh's family to get one. My dd was born in January 2000 and didn't get a trust fund as they weren't introduced until then.

ihategeorgeosborne Thu 17-Jan-13 15:53:51

Thanks Amanda. There is no other income apart from work. He just has a straight forward P60 at the end of the tax year. He doesn't receive a P11D, so no benefits in kind to declare. Savings are in my name as I am SAHM with unused tax allowance. I would imagine we are pretty straight forward, though cannot see how he will get a tax rebate. He does a pay a bit to the NSPCC which he has never claimed relief for being on PAYE. May need to check this out. Perhaps we should pay the £100 or so and see an accountant. It's just difficult knowing who to speak to. It's a bit like doctors and mechanics - some are good and some are not so good. Does anyone know if you can back claim for charitable donations?

AmandaPayne Thu 17-Jan-13 15:56:39

You definitely can claim back for charitable giving. At my old work a lot of the senior people had to do tax returns for various reasons and whenever there was a charity thingy HR used to send round an email reminding them to be generous and then claim back the extra bit! That was a while ago, but MrAnchovy on my other thread is an accountant and confirmed it still applies. No idea about proof of payment, etc you need though.

ihategeorgeosborne Thu 17-Jan-13 16:01:21

Thanks. I think we need to see an accountant. DH has been paying to NSPCC for years AFAIK. We have never claimed back the tax relief. There must be about 10 years worth smile

AmandaPayne Thu 17-Jan-13 16:02:20

Not sure how far you can go back. Don't think it's as far as 10 years. Might be six though Not sure where I got that number from though.

CogitoErgoSometimes Thu 17-Jan-13 16:11:25

"why would he not be paying the right amount of tax now?"

I found that the main areas that could be wrong were pension contributions, charitable donations and the value of a company car (if applicable). If it's any help, I use a nifty bit of self assessment software called 'TaxCalc' which is about the best £25 I spend all year. Leads you through the whole SA process by the hand and lets you see whether they owe you or you owe them at the end. I always seem to end up being owed money.

I am a little hmm about the whole 'moral' dimension being tacked on to the question of cancelling CB - we are no longer entitled to retain the CB but I am continuing to claim, keeping the money in a separate account (the amount of interest is not life changing) then we will go through the tax self assess repayment route.

It makes no sense to me to stop claiming we are not so much over the 60k threshold and the threshold may change in future, dh could change jobs - when I return to work he may want to take a lower paid job closer to home. So retaining our claim is the option I am most comfortable with. In my opinion the CB payment is a recognition of the cost of raising a family (of future tax payers). I am also fed up with the line being trotted out by Gov spokespersons - 'why should a family earning 20k be paying for the CB of a family earning 80k?' as it seems to disregard the fact that a family on 80k is paying tax in excess of the lower paid families income - just another example of our Govt divide and conquer approach - really divisive and unpleasant. I don't mind so much losing the CB (although we are certainly not using it champagne and second cars) but I do resent misrepresentation.

ihategeorgeosborne Thu 17-Jan-13 16:15:06

Thanks Cogito. Will look into it. DH has pension contributions deducted at source from work, so there won't be any claim there for us. No company car or other benefits in kind either. Could well be onto something with charitable donations though.

Toto110 Thu 17-Jan-13 16:43:32

Ah, my mistake. Thank you. smile
On that point then, yours will also benefit and lose out from the double edged sword of tougher GSCEs with less course work; better for the children to be tested more rigorously, but tricky when it comes to the job market and competitive playing field they are up against. They can't really say they are a '2015 examinee' so their B should be considered an A. And they won't have the advantage of multiple past papers with which to revise.
Chopping and changing every five years just makes individuals fall between the cracks. I would prefer if the State were kept small and focused on projects that need people to come together to solve/finance such as road building, while staying out of other matters where individuals and families are better placed to decide for themselves.
It would be better to cut benefits, along with taxes (when there is some money around), and let people decide how to spend their own money, rather than all this tax and then redistribution to those you have already been taxed.
Instead of jostling for political advantage the parties should come together and decide on some 10 to 20 year plans and get rid of these vote winning carrots like child benefit and child trust funds (which I think have gone, although I haven't tracked it because not eligible). They just create the illusion that one is getting something back, but it is paltry compared to what has been put in by many.

Groovee Thu 17-Jan-13 17:18:11

I would have preferred to opt out of the trust funds as dd and ds had savings accounts set up for them as soon as they had their birth certificates. Now ds has something dd didn't have and put me in a situation I was never happy with.

Toto110 Thu 17-Jan-13 17:47:42

I sympathise. It's rotten to have an unlevel playing field created in your own home which is out of your control. Particularly as you made the effort to get them started off well even with all the start-up costs of children coming upon you.
It's similar to child benefit where some better off families will continue to be eligible while other 'less well offs' are not.
It does make the case for getting State involvement out of mainstream society where individuals are better placed to make their own informed and fairer decisions, while it focuses on the minority cases. Then hopefully the majority can end up paying less tax into the centre.

LonelyLinda Sat 19-Jan-13 16:42:10

Thank you for the advice, I will opt out if I am still in time. If not I will save it so that it can be repaid later.

Thank you.

DorisIsWaiting Sat 19-Jan-13 17:29:43

I've just had a look and the home responsibilities proection (now national insurance credits) are still applied to those SAHP claiming child benefit up to the age of 12.

If you cancel CB I understand you would lose this credit (although with the most recent pension changes this may not be such a worry?)

you can apply for child benefit but opt out of the payment and still get the NI credits.

stargirl1701 Sat 19-Jan-13 18:36:57

We will stop claiming CB when we can combine our personal allowances. If we are a unit for benefits then we should be a unit for taxes.

Join the discussion

Join the discussion

Registering is free, easy, and means you can join in the discussion, get discounts, win prizes and lots more.

Register now