Child Benefit and High Earners Tax

[LimeSupper]

Please could anyone shed some light on this for us as I’m reading what I can find on the Gov website and it’s just not clear.

I have two very young DC, was told when they were born to apply for Child Benefit and that it’s not just a payment, it’s important for NI number when DC are older and also for pension contributions. I went back to work when DC were six months old and have continued to work so I’m not sure of the pension contributions aspect is relevant. I took a new job in January earning £60k. What do I do about CB? Is it still worth claiming it or not?? Husband earns £49k, should he be claiming it? I can’t see why we would bother but friends are saying it’s very important for NI reasons and pension contributions. If we both work, am I missing something important?

Thanks

I would put the extra 10k into your pension so you can s claim it.

You won't get Child Benefit if one of you earns over 60k, but you should still claim it but opt out of payments. That means your children will automatically get a NI number once they turn 16 and not have to apply for it themselves.

@Tinkles78 how do you claim it but opt out of payments?? Wow I didn’t know that was a thing!

@FernGilly ha! I wish we could afford to put an extra £10k in my pension

It's only important for NI contributions if you're not working. It's so that SAHMs don't get discriminated against when it comes to their state pensions. If you're working and paying in, you're covered.

Also both incomes are considered so you are way over the threshold. You can claim it I think but you'd have to pay a tax charge. It's not worth it.

Apply for it to ensure you get child's NI number. There is a box on the form to tick to state you don't want the cash. We did that as, otherwise, you have to do a tax return form and pay it all back which is an extra faff I don't need.

@ToddlerMumma that sounds like a great solution, I didn’t know that was an option. Thank you!

Now I just need to work out how to change it to opting out of payments.

You can claim CB but opt out of payment. Once someone in the family earns £60k+ then any CB would have to be paid back. This would be whether you or your dh claimed it.

You will be getting the NI credits from working. That part is more relevant to a stay at home parent. If you have a claim already and opt out of payment then your kids will still get their NI number sent to them at age 16.

If you do take the money then you'd need to register for self assessment and declare the CB so it can be paid back

Claim to keep the NI credits but opt out of payments. They will fine you if you have been receiving payment whilst over the threshold, we didn’t realise and had to pay about about £2k as a lump sum and that was about 5 years ago

www.gov.uk/child-benefit-tax-charge/stop-child-benefit

Another advantage to claiming even if you are ticking the box to not take payment for now is that if your circumstances change due to eg. illness or redundancy, it’s a quicker process to get the payments restarted.

If your salary is 60k it is probably still worth getting child benefit. Any pre tax deductions bring down the income number that is used to work out how much child benefit you need to pay back. Pre tax deductions include employer pension schemes (e.g I put in 8% of my salary), and cycle to work schemes.

Check your earnings after pension contributions, it may be below £60k. If it's above you can call hmrc and tell them to stop payments

It won't be relevant for this tax year as you probably won't reach a threshold by April to start repaying. Any surplus for 2021-22 is only repayable by next January. Either opt out from April 2022 or register for a self assessment tax return as it is unlikely you would not be entitled to anything and there may be other amounts to offset the charge.

@gogohm if it is below 60k after pension contributions, would that still mean me filling in a self assessment evry hear and Pago BFF it back in one lump sum? If so, not very helpful and would be better off opting out

[quote LimeSupper]@gogohm if it is below 60k after pension contributions, would that still mean me filling in a self assessment evry hear and Pago BFF it back in one lump sum? If so, not very helpful and would be better off opting out[/quote]
50k is the point it starts to be repayable on a sliding scale to 60k. It is only repayable by the following January, so you could set some aside.

Once you go over £50k then you'd need to pay some back via self assessment and once you reach £60k it all needs to be paid back

Hmm it all just seems like such a big faff for no real gain? The whole claiming and self assessing and paying almost all of it back, I mean.

@LIZS that’s helpful, thank you. I was earning a few pounds below 50k until this job so I’ve never had to self assess before. I’m highly likely to get a few £k pay rise in October this year too so I think opting out of payments is a plan. I can’t see where to do that but will call them Monday.

Thank you all!

Self assessment is an hour or so of time. Seems like a good return to me.

@Rollercoaster1920 well it depends how straightforward it is I suppose. What if you change salaries during the year for example? Also, say it was 59k you early overall, how much money would you be paying back overall? Almost 100% of it in any case?

I gave a link earlier about stopping CB. Can be done online

[quote LimeSupper]@Rollercoaster1920 well it depends how straightforward it is I suppose. What if you change salaries during the year for example? Also, say it was 59k you early overall, how much money would you be paying back overall? Almost 100% of it in any case?[/quote]
It's 10% per extra £1k so if you got £59k you'd pay 90%

@dementedpixie thank you! There doesn’t seem to be an option for stopping by payments but still claiming? Just claiming or no claiming at all.

You already have the claim and now you're stopping the payment. It can be restarted if required too

Opting out at bottom of this page

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

Thanks both x