Child benefit tax

[What0nEarthIsThis]

Hi,

I just read in the financial times that parents whose spouses earn >£60k a year have to file a tax return every year to pay back all their child benefit. The article says that that rule has been in place for about 10 years and if we did not do it then we have to still pay it back now, but we also have to pay the interest on the money.

It says if we give up having child benefit entirely then we won't get state pension credits for the time we are at home with kids.

I'm staggered. I had no idea about that.

I'm a SAHM and I have no income of my own. I don't file a tax return and don't know about tax rules. I never looked into them because I have no income to pay tax on.

I'm also properly cheesed off because life is so hard with the underfunding of the schools and the medical services, and now this comes along to add insult to injury.

I wondered if anybody else knew? And what do you think about it?

The article is called "Why Jeremy Hunt’s parent tax rate is proving controversial" but it's behind a paywall so I can't share it.

https://www.ft.com/content/08f678d7-1ac2-4f9d-86c9-3da040ca4107

Thanks!

I knew and my kids are adults now. You do register for the benefit, so that you get credits for your pension, but you don’t take the money.

Yes we got hit a few years ago, the first year my husbands pay was about £52000 and we had to pay a portion of it back. Then the following year, he sold employee shares, and had a few bonuses during covid and his salary hit just over £60000 luckily once I’d realised , I stopped claiming but still had to pay them over £1000 back.
I was only working part time myself and my husband is usually on around £35k so it was a bit galling. To think that a couple could earn £49k each and not have to pay a penny back.
It’s all back to normal now so my husband or I are unlikely to receive that kind of salary again.

I'm surprised you didn't know - there are threads on it on MN every few weeks. You can claim the credits but not receive the money if you don't want the hassle of paying it back, and it will cover your NI.

I'm a sahm to a high earner so my mum makes the claim - she contributes to the dcs more than the amount of child benefit which means she can claim even though she lives next door. Not affected by DH's salary as it's a different address.

Sorry, I don’t think there’s many good excuses for either you or your partner (both actually) not knowing or not caring to find out.

It's not you who has to include it in your tax return though its your spouse isn't it?

The reason its important to claim in your name as SAHP is for the national insurance credits for your state pension. Unless your spouse is paying those for you?

Its stupid isn't it also that 2 parents can earn 49k each and still get it buy one can earn 5k another 60 and not be entitled.
I'm now on 55k so I'll need to pay some back but not all. I'm too dense to work out the figure so I put it into a savings account and I'll pay back what I'm asked to at the end of the financial year.
In your case, I think you can apply for it but not take it so your state pension is still protected.

I get so cross about this, earn just over £50k as a single person household and you have to pay (some) of it back but a household earning nearly £100k doesn't. It is hugely unfair.

I'm not sure how you didn't know it was huge news when announced and there are threads on here constantly. It wouldn't be you who files the return it would be your partner and as they are earning over £60,000 I imagine others in their workplace are and this issue will probably be being discussed at work as well.

Either way its best to claim it and your partner pay the High Income Child Benefit Charge (its not a tax) through submitting a tax return every year. If its the only reason for doing a return it is very easy to do online.

I'm just about to start a job at almost £60k - what is the best thing for me to do?

We got hammered and I had to put in tax returns all the way back to 2013/14, it was endless tax returns and paying up.

We are registered for it, but opted to not be paid it.

Yes we knew about it. We knew in tax year 22/23 my husbands salary less pension would be just over the £60k mark so we saved the child benefit for that year in premium bonds then cancelled start of April 23 so we won't have anything to repay for tax year 23/24
I'm surprised you don't know about this. HMRC also wrote to my husband after April 23 to advise him that he would need to repay

Don't take the money, as you'll end up doing a tax return and pay most of it back.

The higher earning spouse reports it, even if the other spouse receives it.

Pension contributions are usually taken in account which does slightly help the situation.

I'm surprised you didn't know about it.

It was all over the papers and all over MN at the time.

I know about and I don't receive CB anymore.

Yes I know. When DS was born DH wasn’t working due to illness so he got the child benefit which protected his pension contributions and as I earn over £50k I do a tax return. DH went back to work after a couple of years but he still gets the CB and I still do a tax return. It’s quite straightforward and it helps (usually but not in our case) Stay at home mums protect thier state pension

Usually advisable to take it. Better to have some CB than none and the tax return takes less than 30 mins to do it’s not really a huge chore.

Firstly this is bonkers ae you are claiming money you aren't technically entitled to and if your mum claims it and you are a SAHM you won't be getting your pension contributions for yourself as that's the whole point of you claiming it and not getting the money.

@What0nEarthIsThis I did know about this when it first came out but DH salary wasn't high enough to worry about it at the time. We luckily just caught it again recently and have had to do 2 years back pay to them, we haven't had to pay a fine just a small amount of interest on the first year we missed.

We both think it's ridiculous that it's on a single salary, but the government's tax and benefit system isn't linked in any way and they have no way of doing it on a joint income. I guess it would cost them a lot to set that up. But it would be more fair that way.

Usually advisable to take it. Better to have some CB than none and the tax return takes less than 30 mins to do it’s not really a huge chore.

I found them a right pain in the arse that I didn't need, and all of it was being paid back.

Have you been living under a rock? You can still get the NI credits by registering, then opting not to receive the benefit.

So you’re financially savvy enough to read the Financial Times, but didn’t know about Child Benefit rules?

Seems ironic to be complaining about underfunding of nhs etc while contributing very little and ultimately taking benefit against the rules - if it bothers you so much then go back to work ?

Op if it's you earning the £60k and your husband also has a full-time job then just cancel it. The benefit for state pension is only really for SAHM as they won't be making any NI contributions. But when your working you are doing that anyway so you just won't need to claim it.

Is it actually possible and OK to do this? I am the higher earner and so we don’t claim CB but my DM, who also lives on the same road, does an awful lot for my 2 DC when I’m in work - school runs, dinner etc. and I would love for her to be able to claim it for them as I can’t.

Actually that should be SAMP as it would apply to the man to if they are at home.

@hellonnme if you're a sahm it would be better for you to claim the CB so you get the NI credits. You can either claim and opt out of payment or get the money and then the higher earner would have to pay back some or all of it via a tax return