Reduced Tax for High Earners

[shortfamily61]

Everyone has slated the Boris promise of tax reductions for £50k+ and everyone is slating it. I have just nudged into high earner but just want to get it out there that earning more does not immediately = you can afford to pay more tax.

Because I earn more, I get no free child care, I get no tax credit and because I breached £50K, I've just had to pay back £3,700 (in one hit) for all my child benefit. I save this in an account for my son (I do not benefit from this money), I never knew I was not entitled to child benefit. When I asked tax office, even they sent me apology for not telling me but they were quite happy to charge me fines for not paying back immediately for claims in 2016!!! I needed a loan to pay tax man!! I have worked out that if I was only to earn say £25k I would pay marginal tax (currently pay £1200), I would get maximum benefits and be £273 better off a month.

I have tried to bring myself up from a "working class background" and am happy to pay tax for what I earn but am frustrated when people think that bettering yourself immediately means I must pay more. I am not a millionaire - I pay my tax and a reprieve for "middle earners" who work hard for their money is a damned good idea for me. I spend more if not taxed as much and I keep the economy buoyant so why berate me.

If you had to pay back ALL your child benefit then you must be earning quite a bit over £60k, or not contributing to a pension.

You aren't a middle earner if you are earning over £60k, sorry.

There is already a thread on this today, so why not add to that. Quite a few high earners on there feeling sorry for themselves!

Earning £50,245 so hardly a deal breaker

Plus pay 6% into pension

Don't feel sorry for self but feeling foolish to better myself. Like I said, I could earn a lot less and pay bugger all tax, get maximum benefits and be better off. What is the incentive to work hard and achieve more?

That doesn't make sense, you don't pay back all your CB if you earn £50,245. You don't lose it all until you are earning £60k taxable - so after pension contributions.

Are you a single parent op? I do think the tax system is harsh on us single parents who earn more as we have to pay expensive childcare but get no help whatsoever. A married couple earning 30k each would get to keep their child benefits and pay less tax

If you're earning £50,245 then you shouldn't need to pay much child benefit back at all. If that's before the 6% pension contributions, then you shouldn't need to pay anything back at all.

You shouldn’t have to pay back cb then op. Put more in your pension to take down earnings to below 50k.

LINK here www.gov.uk/child-benefit-tax-charge

As soon as you breach £50k

It’s frustrating as two people can earn £24k each and pay less tax and keep benefits whereas one earner can’t.

Marginal income tax is 60% over £120k and I know people who’ve gone part time etc to avoid it.

I've been paying 6% since I was 30yrs old, I am now 48!

You pay 10% of the child benefit back for every 10k you earn over £50k, so you shouldn't need to pay it all back.

But public services have to be paid for somehow. DH is a high rate tax payer, I’m not quite, but between us we pay a lot of tax. That’s ok, because we earn more than most people, and we still have a good standard of living and decent quality of life. Sure, it would be nice to pay less tax, but I still want education, healthcare (while we still have the NHS), and everything else. I’m pretty sure those essential services would just become means tested if taxation was changed and we would probably be worse off

Marginal income tax is 60% over £120k

Eh? How?

No you start paying some of it back at £50k in the form of a tax charge. You have to do a self assessment tax return which as a higher earner you really should be doing anyway to claim back gift aid etc.
www.citizensadvice.org.uk/benefits/child-benefit/help-with-your-claim/check-if-a-change-affects-your-child-benefit/
You don't lose it all until your pay after deductions like get aid and pensions go over £60k.
There is a calculator on the site you linked that will tall you how much you will keep.

Tax office advised that as soon as I exceeded £50K I owe them everything back]

Well they are wrong. Like most Govt departments HMRC are understaffed and underfunded.

I suggest you read all the info on the link I've posted and the link you posted and then write to HMRC to sort this out.

It just frustrates me, whether it is right or wrong, that I tell my kids, work hard, progress and you will earn respect and achieve greater things. And then I say but hey ho, you will pay more (to cover those who don't give a damn) but isn't that charity.

That child benefit calculation is wrong, you need to check that again. It's one person you are earning over £50,000 that year u need to pay back 1% for every £100 you earn above £50,000

www.moneyadviceservice.org.uk/en/articles/changes-to-child-benefit-from-2013

And then I say but hey ho, you will pay more (to cover those who don't give a damn)

Or, you know, for education and stuff like hospitals and police? All things that benefit your family too.

By all means, be annoyed, but I bet you also use public services.

Marginal tax is 60% from £100,000 to £123,000 due to loss of personal allowance.

OP, could you be talking about something else entirely?

You could not have been paid all this child benefit as yet and, since you have only just ‘nudged’ over the £50k, you will also not have earned this much until 12 months have passed.

So, even if you had earned too much (which you won’t have), you have not earned this at this point therefore the tax office would not have asked you to pay money back which you have not even received yet.

You will only be able to work out your earnings for the tax year when it ends on 5th April next year. Then you will know if you need to pay money back (you won’t) which in any case is not due until 31 Jan 2021.

Also, I thought child benefit was limited to 2 kids - where do you get over £3k from?

OP, are you mixing up child benefit and child tax credit here?

There is no way in hell that you had to pay back £3700 of child benefit. For the first child it’s approx £20 a week. Sounds like you have one child as you say you save it for your son. That would be 3.5 years of CB, and you’ve only just gone over £50K, according to you.

It makes no sense that the tax office would apologise for not informing you - they don’t inform you about CB directly, it’s your responsibility. You has to apply, and the rules are clear then.

I have a feeling that you’re talking about tax credits.

@ForensicAccountant it’s CTC that are not capped at 2 children, not CB

Also, as others have said, earning just over means you wouldn’t owe much back - so I doubt HMRC would have a mechanism to even calculate what you owe. Even if you get someone inexperienced on the call, they don’t do the calculation on the back of a fag packet! I’m pretty sure it’s tax credits you claimed incorrectly.

What is the childcare that you’re paying?
On your other thread, your son is a grown adult with an ex girlfriend and a job. I expect you’re not taking into account the tax breaks on childcare for higher earnings in your calculations - because childcare is no longer relevant for you.