Have you had to pay a fine relating to the high income child benefit tax charge? Tell an MP about your experiences

[RowanMumsnet]

Hello

Parliament's Engagement Team has been in touch and would like us to pass on the following - so if you've got any thoughts you'd like to feed back to this MP, please add them to this thread.

Thanks
MNHQ

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"Failing to register your liability to the high income child benefit charge through a tax return can result in a fine."

"On 3 September, Conservative MP for South Thanet Craig Mackinlay is leading a debate in Westminster Hall on the issue, and wants to hear about your experiences. He gave us the following statement: “I share the concerns of those residents in South Thanet who have received financial penalties for failing to register their liability to the High Income Child Benefit Charge, who have previously, as routine PAYE taxpayers, had no need to complete a tortuous tax return. I want to shine a light on this complex area of interaction between tax and benefit rules and these unjust fines.”

“Have you received a fine after failing to register your liability to the High Income Child Benefit Charge through a tax return? Did you feel the penalty was justified?”

"We will pass on your comments and experiences to Craig Mackinlay who will use them to inform his speech. He may quote you directly during the debate. Links to watch the debate and read the transcript will be posted when they become available."

Single parent here. No fine but last tax year I got a bonus which took me over the thresh hold. I received a letter from tax office to submit a return which I did. All a big faff.

It galls to know my neighbours can have 2 parents earning nearly double what I earn, one child, and receive CB. I have one earner, 2 children and have to return part of CB due to a bonus.

I receive no other benefits (thankful not to need or want any) but this CB threshold system seems grossly unfair.

You can increase pension contributions to reduce the amount you have to repay though. I'm a single parent but was earning just over the threshold with benefits, so I increased my pension contributions which had the double benefit of bringing my 'income ' below the threshold whilst also boosting my pension pot in a tax efficient manner.
It is frustrating & unfair that it is based on just the higher earning parents income though, irrespective of circumstances.

The current child benefit rules for high earners is extremely unfair and discriminatory .

A couple can earn 49,995 each and nearly 100000 annual income combined ,and still receive child benefit .

On the other hand , if a couple has one person earning over 60,000 while the other looks after the young children , or cares for an elderly or disabled child or adult , ( where they may not necessarily even be able to claim any other benefit or financial support ) , they do not get child benefit .

So while the couple who earn nearly 100,000 a year continue receiving child benefit, the family with potentially the problems , young children and lower combined income , don’t get the child benefit either .

I can not believe how unfair this government has been to children .

flippyfloppy My understanding is that if you received any CB this year, and you were paid over 50k this year, you will need to pay some of it back (1% for every 100£ over 50k)

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

If you're currently on paye, you should have got your P60 recently. That has also the info you need. Alternatively, once you register for self assessment, you can see all your personal tax details through your online account.

Not sure if the rules had changed but we had our grandchild and low/no earning parents living with us for a while, we were financially supporting them all. The following tax year, after they had moved out, my partner's income rose above the threshold and we received an automatically generated letter saying that someone at our address. HMRC explanation was that the computer system dealing with this was a blunt instrument (and by implication not fit for purpose)

@dressinggown it will not have implications for your kids NI- but for yours.

If you are not earning enough to pay NI, then claiming CB 'protects' those years in terms of your pension contribution years. If you earn enough to pay NI, then you do not need this protection.
I suspect that in decades to come, people who have not claimed CB because of all this hassle will lose out pension-wise as they won't have enough qualifying years.

I think.

A couple can earn 49,995 each and nearly 100000 annual income combined ,and still receive child benefit

To add insult to injury, the dual-income family will also pay significantly less tax - as much as £10,000 less each year.

@latebreakfast, yes this is what upsets me. So as a single parent, I pay everything for my children, I earn just enough to have to pay back all the child benefit, and unlike a two parent family who may earn slightly more say 2 x £30k and claim the benefit, I don’t have the benefit of £22k tax free allowance. It’s totally unfair and really wrong for single parents who actually need it most.

Yes. We had a large fine. We knew nothing about having to do the tax return until it was too late. We ended up paying the fine and stopping the child benefit. The whole system seemed unnecessary and complicated.

Another single parent here. My income has gone above £50000 so I’ve been trying to work out what to do next. It’s really unclear online and I’m waiting to get a login to do self assessment. Agree with others it seems very unfair that a 2 parent family could claim full child benefit and pay less than if they earn just under what I earn each.

George Osborne didn’t half mess things up

It was the libdems who insisted on it as part of the coalition. They basically hijacked Osborne by announcing it at their party conference before the Treasury/Osborne had done the due diligence etc as to how it could work, pitfalls, etc. So if you want to blame anyone, blame Vince Cable who was the libdem's Treasury man at the time!

The tax system is complicated enough as it is, and HMRC is incompetent as it stands, without complicating it further by trying to use it to deal with benefits. They should be separate and kept separate. Gordon Brown started the rot by calling a benefit "tax credit" which had absolutely nothing to do with tax and having it administered by HMRC. Confusing two different things, i.e. tax and benefits was never going to end well.

But there would be nothing wrong with reducing tax liability - that would actually be simpler - Could be part of PAYE.

Derailing slightly, but single parents should have a greater tax free allowance- it works for council tax.

If they wanted to simplify things, they could have scrapped child benefit and brought in an additional "child allowance" so people with children got a higher tax free allowance so paid less tax.

Trouble is, then you'd have the squeals of anguish from the people who don't pay tax who'd lose out.

It would have been far better just left alone. The whole tax/benefit systems is on a knife edge - it's already far too complicated, poorly administered, unfair, etc., so bringing in extra complications was madness. Just libdems wanting to punish the "rich" as per their manifesto.

Can I ask if the MP has spoken to or engaged with the HMRC staff who are having to administer this or with the complaints department of HMRC? I think people in HMRC are well aware of the problem in administering this but can do nothing as the orders come from on high.

We opted out. I hope dh ticked the right box to protect my ni contributions. I earn 24k.

I’m baffled by the number of high earning, no doubt mainly in professional positions, have struggled with understanding this.

It’s not rocket science. It’s really not complicated at all.

lovemenorca it does get unnecessarily complicated when incomes fluctuate etc.

‘A couple can earn 49,995 each and nearly 100000 annual income combined ,and still receive child benefit

To add insult to injury, the dual-income family will also pay significantly less tax - as much as £10,000 less each year.’

This ABOVE is a disgrace . I simply cannot believe that families where one parent is the higher earner going over threshold ,while the other has a lower earning / no earnings , perhaps through family issues such as caring for young children / child with disability / child illness making it difficult to find work that fits etc are being penalised in this way . Especially when clearly one parent is trying to compensate for the other , then they get smacked in the mouth for working and trying harder

It’s disgusting that a family with a combined income of nearly 6 figures pay 10,000 LESS tax and KEEP the child benefit while those couples where only parent can work and is putting extra hours to work up the ladder or putting extra hours to bring money home to compensate for the other partner / family situation is being PENALISED by getting TAXED more than a family on nearly 6 figure income , LOSING the child benefit which the family on a nearly six figure income STILL KEEP. DESPITE their household income being significantly LOWER than the nearly 6 figure income family .

Disabled children whose one parent can’t work or struggles to get work , families where one parent is also caring for a child or the elderly get a kick in the teeth while they are down .

Single parents earning over 60,000 getting PENaLISEd is also a disgrace .

All the stress of being a single parent and then they get the child benefit taken away while they try to earn more to make up for the shortfall and lack of a partners income . On top of it I the single parent also spends horrendous amounts on childcare to BE in work and able to earn more .

I think previous posters have mentioned this but I think this year my bonus may tip me over the threshold as we had a great year. However next year my bonus is unlikely to be as high so I'll be under the threshold. I am contemplating cancelling it but are there implications? The website isn't clear.

@lovemenorca I wouldn't really call someone on £50-60k a high earner, there's only one of us working and two thirds of our income go on bills, train fares and rent.

@theneverendinglaundry.

Agreed
But I would certainly hope someone on such a salary to be sufficiently well equipped to understand something that is, whilst not as clever as ABC, is not exactly challenging

I am a single parent living in London. I earn £51,000 a year. My youngest is in full time childcare and eldest in school.

I find having to do the tax system time consuming and confusing. Is it fair that I lose some of my benefit while 2 parent families with both parents earning up to £50,000 do not lose money or have to fill out the ridiculous process? Why can't my payroll do this for me?

I have childcade costs and a large mortgage. We have not been on holiday for years. I do not feel rich.

@lovemenorca I can certainly say that whilst I did complete it last year, it wasn't easy!