Child Benefit and pre tax benefits...

[TeamEponine]

Hi all,

I'm a bit confused about whether or not I am eligible for CB or not, and I was wondering if anyone on here might know the answer. I've googled, but can't find the answer!

We have one child, DD is 16 months. I went back to work half time when she was 8 months, but I'm due to go back to ft in April.

My ft salary will be about £55k, but my pension and DDs nursery fees come out of my salary as pre-tax benefits. This is about £1,750 a month, making my annual taxable salary about £24k.

My question is... Would HMRC consider my £55k full salary or my £24k taxable salary when considering my eligibility for CB?

Part of me is tempted to just decline the CB as we are not really struggling and I know many other families are far more in need. However, I am the main earner in our house, so although my salary is high, our total household income isn't that high. FT nursery fees are extortionate and we live in an expensive part of the country and therefore we have a fair sized mortgage, so we will get by, but our income only just covers our basic costs of living.

I really don't want to be having CB and then have to pay it all back, I'd rather just decline it. On the other hand, if I am eligible it would make things a little easier.

Sorry, that's far longer than I planned!

Thanks

At £55k you would be entitled to part of the child benefit anyway as the upper limit where it ceases altogether is £60k.

Wow how do you get your nursery fees in pre - tax is it an on site nursery? that is a massive perk.

So it would count the full salary?

I've tried reading up on what happens between £50k - £60k, and it just seems so complicated. I really don't fancy having to pay back a lump sum of tax each year!

Pretty sure it is your taxable salary btw.

Yup, we are lucky enough to have a workplace nursery! It does make a huge difference financially. But then again, ft fees are nearly £1.5k a month, so it really isn't a cheap nursery.

It can also be used by people outside of the workplace, and I really don't know how they afford the full fees!

It is wonderful to have DD so close by too.

Taxable as in after the benefits? So the £24k?

Sorry, I feel so dim on this issue!

Even before taking off your pension you are entitled to some of it so worth claiming. If you fill in the self assessment before the 30th of December they adjust your tax code so you never have to pay a lump sum back. Beware though as the publicised deadline is the 31st Jan but you would have to pay back a lump sum if you leave your at return until that deadline.

However I think you will be entitled to the full amount as they do take off pension payments and salary sacrifice first.

Just make sure you register for self assessment and get it done before the 30th December.

It is what you actually earned in each tax year. Your p60 should show the amount. Chances are you have fallen well below if you worked pt.

In which case you are very lucky - it will be the £24k which counts for cb too.

Yes, I am lucky, and grateful!

Thanks for all your help on this.

I know I'm fine for the 15-16 tax year, just thinking ahead I always do my SA in the May, as soon as I get my P60 through. I like to be well organised!

www.gov.uk/guidance/adjusted-net-income this says you use adjusted net income for child benefit high income charge

P. S everyone who has a child should apply for child benefit but if you earn over 60K then you can opt out of receiving the payment.

Oh, that link is really helpful, thanks! Why couldn't I find that myself?! I did try...

Looks like they will consider my salary after taking off pension and nursery fees.

Thanks!

Just a little update in case anyone else in a similar position ends up reading this thread. I spoke to HMRC and was told that the salary sacrifice is not taken into account, so my income for Child Benefit is the £55k full salary.

The best bit is the reasoning why... Sending DD to nursery is "my choice".

Ummm, so would HMRC prefer me to choose to stop working, stop paying tax and be a SAHM? How are you supposed to work without childcare?

Bloody idiots.

I'm not sure that you've been given correct advice, particularly regarding pension contributions as they are definitely not counted for child benefit. HMRC don't always give correct advice - if we'd listened to them on one occasion we would have lost £12k!!

What is the figure on your p60 and does that include your pension contributions?

Urgh! Perhaps stupidly, I assumed HMRC would know what they are talking about! My p60 should be through soon, so will check that!

Many couples work without paying out childcare, they work around each other sacrificing family time. We've done this for 16+ years, we had no choice really as childcare for 4 kids would be unaffordable. DH works roughly 9-5, I work evenings, weekends,nights.

That's not correct an salary sacrifice reduces your income for CB purposes.

*any

Babyroobs - sorry, didn't mean to offend. Unfortunately both DH and I work in jobs that only exist in 9-5 M-F and we have no family nearby. Without paying for childcare, we wouldn't be able to do our jobs.

I guess I will try calling HMRC again and see if I get a different answer.

I'm just wondering, do I need to call them multiple times and ask the question, then go with the majority response? Best of five maybe?

See what is on your p60 and speak to hmrc again. If you're still not convinced that they're telling you the correct information then I would recommend speaking to an accountant.

Even if your salary is 55k you'd be eligible for some CB so continue to claim payments then register for a tax return which for this new tax year wouldn't be due until Jan 2018. Some deductions such as pension contributions will reduce the 55k, and there is room to break this down on the form.