Can't afford the payrise offered

[Agwen]

I feel very lucky to have a job that hasn't been impacted by Covid, and appreciate that I'm in a much more fortunate position than many at present. My employer offers a pretty much guaranteed payrise every year that isnt quite at inflationary levels, but not too far off. The next time this happens it will just tip me over the £50k point and I will lose my child benefit- as a single parent of 3dc this pays for the breakfast club and after school club that allows me to work.

I am losing sleep over what to do when the time comes in March and my boss hands me a letter with details of a pay increase that I can't afford. It will mean an extra £30 ish in my pay every month after tax but lose me £180 in Child benefit.

I don't know what to do, I am so worried that I can't think properly :(

Don't know the full details but it's a sliding scale between 50 and 60k so you won't lose the whole lot, but will have to repay a bit by doing a tax return each year. Someone else more knowledgeable will know more details

You won't lose that much of your child benefit will you? It's on a sliding scale from £50k to £60k I think.

Some options for you - apologies if you have already looked at this.
Can you afford to make pension payments to bring you back under £50k?
Have you checked how much you will have to pay back - it's a sliding scale upto £60k.

Yep, if you earn 51K you keep 90% of CB 52K you keep 80%... All the way to 59,999 you'd prob keep about a penny!

You'll be better off with this payrise, not worse. Congrats

I feel similarly but with a lower income. I have recently had a pay rise which is cancelled out by tax credits. But long term you are better off. It is short sighted to reject a pay rise for benefits which can be cut and aren't forever.

The child benefit sliding scale I think allows for pension contributions so up the percentage you pay to take you to just under 50k again.

Yes as others have said you won’t lose it all. You can increase your pension payments if you like, so that you don’t lose any child benefit.

Oh wow! Really? I didn't realise- I thought it was a case of £49,999.99 = CB, £50,000 = not a penny of CB

How does it happen, do I have to declare something to the child benefit people or does it happen automatically?

This will make such a difference to how much I sleep

You will need to fill a tax return to declare it. It doesn't take long to do.

Another option if you don't want you salary to increase is to see whether you could agree flexible working, drop an hour or so per week or leave early on the last Friday of the month? You would end up with the salary you have now despite the increase.

Can you put the difference in a pension?

And as PPs have said, do you have any other salary sacrifice schemes at work that you can pay a little more into to bring you back down under the £50k pa? We increased DH's pension

I think it’s the HMRC on a self assessment tax return that you need to let know. Last time I had to fill one in there were some questions about it

It's a sliding scale between 50k and 60k, you get the full amount then declare it on a tax return at the end of the tax year and pay back the bit you are no longer entitled to. So that's good news for you.

It's a stupid system though as a couple each earning £49,999.99 would be entitled to the full amount despite their household income being 2p off £100k, whereas if one parent in a household, even a single parent, earns £60k they get no child benefit (or have to pay the full amount back). It's for the benefit of the child, not the adults so I think all children should get it regardless of family earnings, like they used to

Add the extra into your pension, OP.

I earn closer to £55k when factoring in car allowance and I keep most of my child benefit. There are lots of deductibles - pension, child care vouchers (circa £2,500 a year), buying a weeks a holiday (£850), working from home allowance (circa £300), also if you use your own car for work and claim mileage back the difference between what the company pays and the government threshold can be claimed (for me that works out at £1500 a year). So you can see that all of a sudden you are back down to £50k

Bear in mind though at some point you'll need to factor in that your next pay rise won't be a pay rise as such as eventually you will have to start paying it back/not claiming it

It is paid back on a linear scale between £50,001 and £60,000. Above that you pay it all back.

For each complete £100 of gross income (not just salary) above £50,000 you lose 1% of Child Benefit. If you get paid £1,000 per week ie £52,000 per annum, you would lose £100 x 20 = 20%.

See here - Katya (ignore Leroy as I assume your position warrants).

www.moneyadviceservice.org.uk/en/articles/changes-to-child-benefit-from-2013

There is also a useful resource here:

www.gov.uk/child-benefit-tax-calculator

Congratulations also.

www.gov.uk/child-benefit-tax-calculator/main

Also check whether you will hit £50k before Apr 6th 2021 - if not you won't have to pay anything back til Jan 23 anyway.
You will need to apply for a self assessment code in advance but the form itself is quite easy as long as you have your p11d.

To put into context, financially you are better off.

Just adding my voice to the salary sacrifice recommendations. Bike to work is another one you can do. I do this, and the self assessment tax return is really easy to do.

Can I just jump on this thread to ask some questions myself? We currently keep our full Child Benefit but I’m starting a new job soon which will push me over the £50k threshold - do I need to inform them of this somehow/will they send me a notification that I need to do a self-assessment, or is it on me to remember?

If you pay into a pension and the 50k is gross pay then it will probably be a while until you go over the limit.

They don't let you know Coffee so you have to remember. Do check though if you need to do it this tax year.

tell them you dont want it - lots of people lower down the scale do this if they are on benefits that top up their money, then offered extra hours that will work out the same amount so they just say they dont want them - know at least 3 people who have done this

@CoffeeWithMyOxygen

You have to register for self assessment - they send you a government gateway account number and you log in and do it that way. If you complete the tax return by a certain date you can just have your tax code adjusted to pay it back but if you leave it too late then you have to pay it off in one lump sum

They don't remind you you have to remember to donor yourself. I know loads of people who got bills for thousands because they just didn't bother doing the tax return