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!

Hi superplumb, will they know to ask you and automatically ask, or will you have to do some kind of declaration?

This.

Yes, same reason here why I claim it. I don't need it for pension credit as I now work full time and DH pays it back through his tax code. But if he were to be made redundant part way through the tax year, I can't imagine the child benefit being backdated to the start of the year, so makes sense to claim it just in case a disaster hits the family which means it's no longer repayable

Just read someone else's post that states the rules. That seems like an incredible loophole! Surely all grandparents of higher earners could claim it, and say that normal grandparent things like presents, treats and days out! Of course grandparents and other relatives who actually raise the children should receive it, but I think personally, you are being immoral claiming it.

@hellonnme but this means your not getting your pension contributions. You do realise this don't you?

If your paying for your pension contributions instead which you can top up to an extent then you defiantly shouldn't be letting your mum claim. Because you are clearly then finicaly able to aford to give her some money instead.

@CeciliaMars a lot of the grandparents will also be higher earners tho. I'm actually shocked people get NI credit for staying home with kids. Maybe it's time universal child benefit was stopped and one parent can claim a tax break of say 1% at 20% or 0.5% at 40% so it encourages everyone to get out and work.

I get NI contributions through another benefit so no need to get them through child benefit.

Why are you shocked that for staying home with their children. Its recongnising the inequality for those who maybe have to stay home (be it finicaly or some other reason). It was shown that women specifically where more likely to be in finical hardship at pension age due to having cared for other family members over time. This helps level that to some extent.

Women who care for young children or other relatives are giving society a lot of support as otherwise the cost to the state would be higher (I know not so much with childcare but it is becoming more as more childcare becomes subsidised. I know that's a whole other topic) also maybe they don't need to claim some other benefits if lower income. Like working tax credits.

Any money you pay into your pension gets taken off. The value of benefits like medical insurance gets added on. What's left is your "adjusted income".
You pay back 1% of the child benefit for every £100 you earn over 50k up to your adjusted income.

If your income reduces during the year you can't claim CB for the earlier months, so it's better to claim from the start and put the money in a savings account. If you're off sick/lose your job and your income reduces you'll get to keep the CB money. If all goes well and your income is over the limit, you pay it back and keep the interest.

Put as much as you can into a workplace pension

How exactly did you find out you could do this. Dh will soon be earning over 60k but because of this meaning different working hours my mum will need to look after dc more after school. If any proof needed for her claiming it?

It says on the form. I really don't mean this to be patronising but don't sign things you don't understand, it could get you in trouble

Does anyone know at what point you have to register for self assessment? DH's income will likely exceed £50k in the 2024-25 tax year, but his net adjusted income will be below £50k once pension contributions are taken into account. Does he have to register after the 24-25 tax year and complete a self assessment form even though there will be nothing to repay at that point. Or does he only need to register after the tax year in which is net adjusted income is above £50k?

https://www.gov.uk/check-national-insurance-record

Check your record here, it goes towards your own state pension. You can pay for some missing years.

HMRC sent me a letter the first year I went above £50k telling me to register & self assess, so I'm always surprised when people don't know.
I am single parent so agree utterly unfair that household income can be 2x £49k and still get it and that threshold hasn't moved but that is the rules. Hopefully Martin Lewis's attention to it, and election year means it might change in the budget.
I treat it as an interest free loan, in my opinion it's easier to stay in the system in case I ever manage to go part-time than leave and re-enter later.
One year I'll be organised enough to self assess before Dec and get it recovered via my tax code....

The grandmother claiming is benefit fraud. You have to be responsible for bringing up the child and if you don't live in the same house and the child lives with it's mother then you are not bringing up the child.

This is a high earner stealing money from the taxpayer. No wonder our public services are in a mess.

@Dornana if you read the link I posted then you'll see it's not benefit fraud at all. You don't have to live with the child to claim it. You do need to be spending the equivalent of the CB amount on the child.

So you commit benefit fraud then!

@Mexicola it's not benefit fraud!

@dementedpixie

The wording is

You get Child Benefit if you’re responsible for bringing up a child who is:
• under 16
• under 20 if they stay in approved education or trainingg_

If the child is living with its parents then they are responsible for bringing up the child not a grandmother living elsewhere.

Under your scenario I could claim it for my grandchildren (parents not eligible) and do what you suggest. If it were legitimate then there would be grandparents all over the country doing it. It's not.

NRTFT so sorry if repeating other posters or missing later updates.

The higher earner should have received a letter asking them to fill in a tax return. My DH earned just over £50,000 last tax year due to staff shortages and needing to work 25 extra hours a week for a year. Thankfully as he tops up his pension (after tax) this was deducted and meant he had actually earned under £50,000 for tax purposes so he didn’t owe anything. Has you DH/DP not received this or have they ignored it?

I agree that the system is flawed and should be based on joint earnings. It seems the government just don’t care as they have done the same with the free childcare entitlement.

@Dornana the eligibility criteria shows here:

You can claim if you pay an amount equivalent to the CB amount. You don't need to live with them

Had to pay all of ours back this tax period that has just passed, earned about £65k after pension contributions, cancelled receiving it as I'm not in a position to pump that much more into my pension just so we can receive back £1,800 a year.

We repay it but my husband doesn’t do a tax return; it’s automatically deducted as part of his payment of tax.

@dementedpixie you need to be responsible for the child. You can argue all you like but this is not what is meant. If the child is living with its parents and the father is a high earner then a grandparent living elsewhere is not responsible for the child. It's benefit fraud.