High earner child benefit tax

[magentafrog]

Scenario:

Me and DP live together with my DCs.
I get child benefit for my DCs.
DP and I both earn over £50k.
So, the higher earner of the two of us is liable to pay high earner child benefit tax.

But, we earn very similar amounts such that it's not really possible to know until the tax year has ended who has earned the most that year. And, it could be different the following tax year.

How do we decide who should pay?
What happens if it turns out the 'wrong' partner was paying it? If the higher earner that year wasn't the one paying do have to pay it in arrears? Does the less high earner who was paying it get a refund?

I suppose we we will need to make an educated guess as to who will earn more each tax year and it will all come out and get resolved when we each do our tax returns.

Anyone got experience of this?

You are the child benefit claimant therefore it will be clawed back on your income first, or if you earn less than £50k, it will be clawed back on your partner.

That's not what the HMRC website says. It says if both over £50k then the higher earner pays regardless of who is the claimant.

Just say you don't want to receive it....

Simple form.

But I do want to receive it. I earn between £50k and £60k so it isn't all clawed back.

Can you do your tax returns at the same time? That way you will know who has earned more. You have to make a declaration that your DH/DP has repaid it if you are over the threshold.

I would just write down what you've done in the little notes section at the end of the return.

The reason it's clawed back from the higher earner is that the more you earn the more they claw back - by £60k 100% is clawed back but there may be reasons you should still claim it even then.

I am paying the charge now so if it turns out he should have then I presume I will have to reclaim it and he will have to pay it in arrears plus ongoing for the new tax year.

I just don't trust HMRC to get it right. People there don't seem to understand it themselves. When I split with my XH they managed to leave us £1000 net down the first month! That was a shock

My husband earns £52,000, I earn £10,000. We don't claim it, it's simpler.

Higher earner pays it back. But you don't pay it back until you complete your tax return, at which point you know exactly who has earned the most, so I don't see the problem? Provided you complete the tax return (or at least do the calculations) at the same time. That's what we do, as we also have very similar and somewhat variable incomes. I should really fill in the form to stop receiving it, but there is always something more important or interesting to do! (and we do receive a tiny amount of interest on it I suppose).

Given your earning more than 100k between you I think you should stop claiming it.

Can i ask why youd want to claim it?

Janet if your choice is to forego the 80% of the child benefit you're eligible for because it's simpler then that's OK. It's not my choice though.

irregular I don't understand how you don't pay it back until you do your tax return. I am taxed on it each month based on what my income was the previous tax year (as that's the best estimate of my earnings for the current tax year).

So by April I will already have had say 20% of the CB clawed back from me for 2016/17 (DP having had % clawed back from him) when it becomes apparent that for example my DP should have had 30% of it clawed back from him and me 0%.

I suppose we just need to let it work itself out once we do our tax returns. In the example above, my tax code for 2017/18 being adjusted to give me back the 20% and his adjusted to collect the 30% from him plus the 30% it will be assumed he will have to pay for 2017/18.

Just wondered what others in the same position experienced as this is the first year we've been in this position - he only moved in with us this tax year.

That should read 'DP having had 0% clawed back from him'.

I'm confused, back at the end of January you posted your DCs didn't even know you had a bf and you were all concerned about it but 8 weeks later your DP has moved in? That was quick...

Fair cop peggy - he's not moved in yet, we're talking about how we would work things out everything from finances, to handling it with the kids etc. etc. Thought it would be simpler to present as a present scenario than 'what if' - it seems complicated enough!

magentafrog I promise we are doing everything right...

You can choose whether to pay it back through your tax code or on a lump sum basis. You are doing the former, we are doing the latter.

I guess we do partly pay it back advance as well, but because it is tangled up with other income and tax payments I don't tend to see it quite that transparently. We have income from a few sources and it is quite variable within the year and between years: regular outside salary, employment through company, company dividends. And the child benefit. If it is a relatively high income year then when we do our tax returns we will also need to make a payment in advance for the following year. If it is a relatively low income year then we won't. In a really low income year we may get a refund. The child benefit repayment gets a bit lost in all that.

The amount you're paying through your code is the tax due on child benefit for the current year. When you do your returns after April it will be sorted out. It's true that the higher earner declares it, but if that's your OH not you, you'll end up getting a refund.

Remember that there are ways to reduce salary for child benefit purposes. Someone who earns £52k and who pays £2k into a pension has an income of £50k for child benefit purposes. Payments to charity reduce the income too.

You should be completing a tax return in this scenario. I would register asap as you may be liable to penalties if you don't.