To think the child benefit, 50k threshold is confusing?

[confusedseaturtle]

Have tried calling HMRC a couple of times but spent ages on hold. Will be calling them later today again but in the meantime was hoping some wise MNetters will be able to help.

I'm a SAHP to two toddlers, DH working ft and just had an increase to 50k.

I thought once you hit 50k you had to start paying some of it back. However have recently read about someone being fined because the company car pushed them over and they didn't notify HMRC.

I'm so confused and slightly shitting it now because when earning 47k, DH also had a company car.

You'll definitely owe, I don't understand as we did at 10000 less than that

I don't have the answers but child benefit have a live chat that you usually only wait 5 minutes to get through on.

Is the 50 net or gross? You don't pay it back until you hit 50 net

You need to factor in his pension contributions though. What they see as his 'earnings' is what his taxable pay is. So if he's on £50k a year and pays 7% into his pension, his taxable earnings are only £46,500 for the year. Does that help? So at the moment being on £50k with no company car and his pension, that will take him well under the £50k so you don't even have to notify them. What you need to do is try and work out when he was earning £47k with the company car, if his taxable pay was over £50k

Once one person earns over £50k, you start repaying some of it until you get to £60k then all of it is repaid.

The car counts towards the £50k.

So if he earns £47k, and his car is £8k you'd have to pay half of it back.

It's repaid via an annual personal tax return.

I didn't realise I'd gone over the threshold (due to complicated income situation) and they just notified me after the fact and added what I owed to my subsequent tax bill. No fine.

We are currently being assessed for this but it's a long process that doesn't seem to be moving fast. I think bonuses and things like company cars and overtime count towards the 50.

if the 50k is gross you may not be at the threshold yet because pension contributions are discounted so probably ok till the gross figure is more like 52,500 depending how much he diverts to pension. it's on a sliding scale so you still get something till you hit 60k excl pension.

misinformation above - it is not net income that needs to be over 50k - net income means having had tax and ni deducted and that is most certainly not what it is measured. the critical amount is the overall gross income on which tax is charged so anything that can be disregarded for tax eg pension contributions, child care voucher deductions, bike to work repayments etc etc can all be disregarded.

Yes you will definitely owe money, we had to take a loan out to pay 5k back. It’s a huge mess. We now still receive child benefit but pay it back in tax monthly as I needed it to found towards my pension contribution as I’m a SAHM. You need to fill in a tax return every year.

Game you can register for the NI stamp but not to receive it

All benefits in kind are assigned a value. Be it cars, private health etc. This value can be found ou your p11d form. This is added to your income eg. Your income is £48k + notional car value £6k = £54k. Then you take away pension contributions. That leaves the figure they work with, if that figure is under £50k, you get it all. If £50-60k, it's on a tapered scale. Over £60k is nothing.

Is that right?

PP above is right. Figure out how much he was having added to his payslip for the company car. If it was as PP said, add that on to the £47k then take away his pension contributions. He may well still be under the £50k with that. Does he still have the company car? If he does, it's unlikely he will be under £50k by adding on the company car then taking away his pension contributions but we may well have been under on the £47k

I think it's confusing too- my husband's salary is in the mid 50s but we don't have to pay any back because of his pension contributions which I hadn't realised. I don't think it's as clear as it could be.

I agree the rules are complicated. I think It's wrong that they penalise SAHPs though.

It's unfair that a couple can earn £49K each, so a family income of £98K, and still recieve CB, but 1 half of a couple on just over £50K means the family lose CB, even though the family income is almost half the other couple.

The 50k is gross not net and including all benefits on P11D, it exclusive of salary sacrifice.
He should do a tax return for this tax year after April. You should also notify HMRC that you may have underpaid in previous years - if you do so voluntarily you may avoid a fine.

It is so confusing - my basic wage wouldn’t push me over but my bonus could, how would this work - are there any resources to look this up?

It hasn’t happened yet but I earned 47.5k this year so I’m close. I’m better off sticking extra contributions in my pension aren’t I?

It's adjusted net (pre tax) income (ANI) that counts. There's a calculator on the HMRC website.

You can take off pension contributions but you have to add on the value of the taxable benefit of company cars and of benefits that appear on your DHs P11D (annual form his employer should give him, sometime between 6 April and the end of June each year). If he was near to £50k for the year 2018/19, he should check what his ANI was for that year now so you're prepared and then make sure he does this going forward, as once you go over an ANI of £50k that triggers the self assessment process and then they can go back a couple of years.

If he pays into a pension, you'll probably still be entitled to some of the benefit so what's probably best is for you to continue to claim CB but bear in mind he might have to pay some back so he should do an annual tax return when he gets his P11D - it really is very easy and reduces the risk of fines due to people not realising/hoping they'll get away with not paying up, which is probably what's happened with the people who've received big fines for not doing tax returns in past years and it's all caught up with them.

Knowhowufeel2

It's unfair that a couple can earn £49K each, so a family income of £98K, and still recieve CB, but 1 half of a couple on just over £50K means the family lose CB, even though the family income is almost half the other couple.

Spot on!

Is the 50 net or gross? You don't pay it back until you hit 50 net

Please don't listen to random posters who don't know what the rules are. There are lots of knowledgeable posters but it makes it impossible to know what you can rely on when poeple post rubbish.

Speak to the HMRC to make sure you get it right, it could be costly if you don't

@GameSetMatch
You don't have to receive the money to get the pension element. I claim the benefit so I get my pension element but opted out of payments as DH's wage was likely to stay the same or rise and we didn't want to bother with a Tax return.
Obviously if the wage is likely to fluctuate it's probably easier to claim the money.

Please ask the question of HMRC etc as to the sate of your pension as a SAHM, and his earnings ? Basically in my day when it became a case of husbands wage being just a bit too high. He decided we would not claim CB, and then I think all payments or credits to my state pension stopped. I did not know this, rules may have changed but please get some answers, you will be fiddled out of qualifying years if not. Also ask husband to pay into any private pension you may have, dont just let things sit there idle, he will still be getting payments from his employer into his.

It is so confusing - my basic wage wouldn’t push me over but my bonus could, how would this work - are there any resources to look this up?

me too! However as I understand it, it will be included! We will need to fill out a self cert with HMRC to see what we owe back.
Tax year 2019-2020 will be my first time i exceed the limit, hence I will fill out a tax return between October 2020-January 2021.

Yes the rules are stupid, unfair and made to catch people out and rinse people with fines.

You'll need to fill in a self assessment form - DH did it for the first time this year. There are various things that 'offset' your income - pension contributions and charitable giving (where gift aid has been claimed). We thought that we'd 'break even' but needed to go through self assessment to demonstrate that. To our considerable surprise, we got a rebate, quite a big one. So you may end up better off than you think.

OP, ask your DH to find his P11D and P60 for the tax year 2018/19 and any previous years where he earnt more than about £45k.

I used the calculator I linked to above with a salary of £47k, company car with a P11D value of £6k (this is not the total value of the car, but the taxable benefit, which is calculated from the value, the CO2 emissions and deductions are made if he makes any payments towards it for private use) and pension contributions of £4k pa and it says you don't need to pay back any of the CB you received for that tax year. But it sounds like you do need to check on these things going forwards.

For others, yes if your bonus takes you over, it counts, and you can keep CB if you make sufficient pension contributions in the tax year, but you'd probably need to check that all payments are counted in the correct tax year, ie I don't think you can wait until after the year ends and then think 'my salary was X, my bonus was Y, my company car adds Z, so I need to backdate so much into my pension to keep my CB'. But presumably you have some idea how much your bonus should be and when it is paid if this is something that you normally get.

Thanks Barbara and only fools.

I’ll have a look at past pay rises to try and work out which year in the future I’ll go over and then look at pension contributions then. We can up them at any time. I’ll have a look at the calculator too.