Child Benefit threshold

[windmill26]

I would be grateful if someone could give some advice on child benefit .The financial year ending March 2018 my husband has earned just over £60.000 due to his bonus (I am a stay home Mum).We worked out on the HRMC calculator that we owe back around £800 child benefit.Reading other threads on this subject I would like to know how much we could overpay in his pension to take us down the child benefit threshold as I would rather put this money in the pension pot. This is what is on the P60 and the March 2018 Payslip.
P60 ; Pay £60.485.96 tax deducted 12866.40
March 2018 Payslip ; Gross Pay £60.485.96
Tax £12.866.40
NI EES £4730.44
NI ERS £7220.41
Pension EES £ 901.58
Pension ERS £1127.00
Bonus £12.254.00
Salary £48.048.99
Sick Pay£ 182.97

I'm no expert but my husband and I do this, so will try to explain as best I can.

At first glance this looks simple. Your husband's gross income needs to be below 50k so the simplest was of doing it would be to pay the bonus into the pension every time it is paid. (Whether than be annual or monthly etc).

However you don't say if your husband receives any benefits in kind such as a company car, health insurance etc. If he does then he should receive a P11d. This figure is counted in the Earnings threshold and you would also have to make an adjustment for this to bring his earnings below the threshold. For example (ignoring the bonus for the moment), if your husband's gross income was 48,200 plus he had a bik/p11d value of, for example, 3,800, these two figures come to 52000, so you would have to pay an extra 2,000 a year into the pension fund. The easiest way to do this, rather than paying a lump sum, would be to pay an extra £167 a month into his pension fund. (If you start this part way through the year you need to make sure you pay the extra for the months that have already been).

The added bonus is that you should benefit from higher rate tax relief on the pension contributions too. There is an annual limit of maximum annual pension contributions of about 40k but that doesn't look like it should be an issue here.

I'm not sure that you will be able to do this retrospectively for the year ending April 2018, but should definitely be able to do it for year ending 2019.

Hope that helps.

Peppamintea,thank you for taking the time to reply.My husband has private health insurance as a benefit but it is offered yearly (I think from April to April) and you need to activate it.He didn't know about the activation loophole so he just did it a few months back! Since April he has been paying more into the pension automatically as he is now over 45.I think he just needs to sit down with someone from payroll to get proper explanations of how all of it works!

neddle, how about NOT! We are entitled to it and we need it as much as the next person,we already contribute and pay enough tax as it is .You just saw a snippet of my financial situation and decided to make a silly comment.Let me tell you a bit more about us.We live in a small apartment that we managed to buy through scrimping and saving while paying market rent for years ,we manage to go on holiday once a year which includes free accommodation as we are staying with family, we drive a second hand car from 2004.Meanwhile the residents in our building that live in council apartments with subsidised rent (from the taxpayers) all drive big 4x4 and have all the expensive gadgets and clothing to go with it! One family has a Porsche Cayenne and a Audi 4x4! So ,we have given for years and still giving but I will not be verbally chastised for trying to minimise our contributions in a legal way!

Windmill 26 👏🏻👏🏻👏🏻. I am sick of this logic. My sister and her husband earn £73000 between them, my husband earns £61000. They have far more money than us, save all their child benefit to buy their child a car at 17. They have 1 child, we have 4( all born before the rules changed) There is just no logic to it. Oh, they also get 30 hours fully funded childcare whereas I use 1/2 of my £7000 a year part time wage on breakfast club childcare.

There are absolutely people who need the child benefit more than us but the ridiculous cut off point for the highest salary only is absolutely unfair for a huge number of families

897654321abcvrufhfgg ,I agree with you that there is no logic .I am annoyed that you have families with both working parents were they both earn under the threshold and they don't have to jump through hoops to retain the child benefit payment and then you have families like mine were thanks to hard work the bonus push you just over this freaking threshold and you have to try to minimise the financial impact and spend hours filling forms! Look,I know you have families that definitely needs help more than us but I didn't make the rules and I am not taking anything away from anyone (like neddle seem to imply!).Also,this is the first tax year that we have been pushed over the threshold so is not a yearly occurrence for us to have the extra money from the bonus.

We haven’t had a holiday for three years because we can’t afford it.
My husband is a postman on £23k, rent is extortionate and I can’t work due to disability.
I’d love to have to angst about how much to pay into a pension.

Neddle - you could've just ignored the thread. The op was asking for financial advice she wasn't inviting debate on the benefit system.

She’s asking how to move money to make it look like they’ve earned less, in order to avoid paying back child benefit they’re no longer entitled to.
That sounds similar to tax evasion to me.

Nope because it is legal.

We do the same btw.

It's not tax evasion.

I have colleagues who and pay large amounts into their pension pots because it makes financial sense and has tax advantages (if you can afford to do it - I can't).

Just to add that child benefit entitlement is on a sliding scale between £50k and £60k - it’s not a case of 50k being an absolute cut off

So for example, someone earning £55k would be entitled to 50% of that years child benefit

So my point is that the closer you get to £50k (with pension tax relief) the more child benefit you will keep.

Many will question why you need it but I would point out that, with child benefit taken into account, your real rate of tax over 50k will be 60 odd % so I would claim back as much as you can!

needle I believe absolutely that child benefit is for families like yourselves. However you cannot think it’s fair that a family with a single earner on £60000 should get nothing whilst a family with 2 earners on £49000 each would still get the benefit? How is that logical or fair. I could reel off the tax, bills, family care commitments that my family have each month that means that we have never had a holiday either and spend all year paying off the credit card from Xmas but the fact is that my husband annual salary would still be more than yours and that’s all you will see.
In answer to the OP’s question, yes u can transfer to pension. We did it for 3 years as my husbands £9000 pay rise became £1600 once tax, NI and 4 kids worth of child benefit was taken off.

Thank you for the constructive and positive advice.Looks like this year we will have to pay some back but I will be monitoring the earning and pension contribution for the next tax year as I don't need the headache.

Windmill

I’m on 57k and can only afford just over 1k into the pension this year

But even with that I will get 10% of the child benefit back

I use premium bonds as somewhere to stash the cash by the way - buy them every month with the child benefit and then that way I have the lump sum ready to pay at the end of the tax year (less what they let me keep!)

10degreestostarboard,good idea.Thank you ,I never thought about premium bonds.

Windmill

They are handy because they let you withdraw the money whenever plus - you never know - you might win something!