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."

Why can't my payroll do this for me?

Most people wouldn't want their employer's payroll dept knowing all their personal financial affairs. The child benefit claw back is based on ALL taxable income, not just wages, so would include interest, dividends, property income, other jobs, casual income, etc etc.

Child benefit should be a universal benefit, not means tested. It can effectively be reclaimed from high earners through higher tax rates in any case. Child benefit represents the important principle that all children are valued in our society - I remember when I first received it this felt significant. Universal benefits are far cheaper to administer than means-tested ones and there is no stigma associated with them. Cameron promised he wouldn't touch child benefit. He lied.

Was the initiative widely consulted upon before being introduced as it appears entirely non-sensible and inequitable?

We used to claim but our mortgage advisor pointed out to us in an informal meeting recently that we shouldn't as my husband now earns too much. I had absolutely no idea. We've stopped claiming but so we also need to complete a form? Utterly confusing, needlessly so!

lovemenorca no, not rocket science, but poorly communicated, unnecessarily complex and arguably inequitable and unfair.

This should be a universal benefit paid to the mother, or primary carer.

Lone parent here who has had massive childcare costs for years to enable me to stay in work (and pay a lot of tax).

1. The threshold is unfair to lone parents
2. I haven’t had to pay a fine but despite hmrc being aware of my earnings through paye it continued to pay me c b after my earnings increased. I am now paying back around six grand in big monthly instalments which has pushed me into debt.

@TheClitterati as a single parent myself for several years, I couldn’t agree more. Totally unfair

@poshme thanks for being much clearer than the inland revenue were when I finally managed to speak to someone. 😊

In the last few years my partner earned over the threshold and our household income with mine came to £93k. So we had to pay some of it back.

This year he has a new job, the pay is less but I earn more due to promotion (which is why he could take a pay less job but with more flexible hours) Together we earn £95k and we can claim CB again! Yay!

Totally ridiculous.

Another single parent here. I earned just bellow the threshold last year but might be over this year (to the tune of about 600 pounds) so won't be able to have it then

I totally agree that whoever came up with this plan has no understanding of the pressures of a one parent household. At least in a two parent household where 1 person doesn't work, there is the option of the other parent working part time to boost their income and it's often a choice. There are no other options for single parents.

Surely it has to be done on total household income, or it's in no way representative of people's actual financial position.

Was the initiative widely consulted upon before being introduced as it appears entirely non-sensible and inequitable?

No, the libdems did it and hijacked the Chancellor by announcing it at their annual party conference - no due diligence, no consultation.

I earned just bellow the threshold last year but might be over this year (to the tune of about 600 pounds) so won't be able to have it then

If you're only £600 over the £50k threshold, the amount you have to repay is tiny. It's a tapering charge, not an "all or nothing" cliff edge.

Kazzyhoward that confirms what I thought.

Why would it not apply to the whole income of the house and £50k is too low a threshold for the scheme to kick in at.

I think they should have scrapped it entirely and added the money to tax credits. They are household means tested and therefore there wouldn't be this ridiculous and unfair 2 earner/1 earner imbalance and unfairness.

Kazzyhoward thanks. Does that not mean that I would not be able to claim the benefit though? As In . Is the fine on top of not being able to claim the following year would you know ? (Sorry pretty uninformed on this matter!)

The scheme is still grossly unfair regardless. What I earn in London does certainly mug make me rich.

I found out completely by accident that because I had saved up and put an additional sum into my pension plan (I'm 52 and it is in a miserable state so I really need to do this when possible) that I did not have to pay back any CB. It's only after going through the tax return process I found this was the case. Very much worth putting some £££ into your pension if you are going over the threshold for CB.

Mind you if this had happened in the years I was paying huge sums in childcare I would not have had any savings to do this with.

think they should have scrapped it entirely and added the money to tax credits.

No way. Tax credit system is a nightmare and so many people end up owing money. A few years ago I stopped claiming them - even though I was entitled to - as the whole system was ridiculously stressful. I still had to pay back £. At no point did I understand any of the figures or calculations - it's like playing with mercury. Everything changes and moves. Seems to be no reason or way of understanding the calculations.

CB should be kept well away from that cesspit.

Child benefit was intended to move money "from the wallet to the purse". It seems to me that for the most part this just removes money from the purse, unless a couple decide to keep it and repay via tax.

I can imagine scenarios where a controlling higher earner might opt to not receive CB so that he doesn't have to pay it back but it's the mother of the children who takes the financial hit.

I also think single parents should be subject to different tax/benefit rules.

Isn't Boris going to do something about the higher rate threshold? Might redress some of the imbalance I guess.

@Doryhunky

2. I haven’t had to pay a fine but despite hmrc being aware of my earnings through paye it continued to pay me c b after my earnings increased. I am now paying back around six grand in big monthly instalments which has pushed me into debt.

To be paying back £6k in CB means you were wrongfully paid it for years.

I put additional money into my pension to keep me under the threshold

think they should have scrapped it entirely and added the money to tax credits

Tax credits are a bureaucratic nightmare administered badly by the incompetent HMRC. One of the worst things Gordon Brown did was mixing the tax and benefits systems - they should have been kept separate. Bringing child benefit clawback into the tax system is yet another foul up badly administered by the foulup dept of HMRC. The more they change things, the worse they make it. Just leave the damn things alone!!

@ArfArfBarf

Sorry posted too soon...I agree, the form is really clear.

In November 2017 HMRC wrote to me out of the blue saying I owed £4834.62 in high income child benefit charge. This related to a four year period 2013 to 2016. I had vaguely heard about the proposed changes in 2012 but had not heard that it had actually been finalised. Apparently I should have been aware due to a ‘media campaign’. A couple of million people got letters advising them of their need to do self assessment but I was not one of those lucky ones in the know!

I appealed but was not successful, even though they accepted that it had been an honest mistake. No one told me that when you appeal you should pay up first and claim back later if you are successful, so their systems kept calling for payment and threatening me with more penalties. I had to pay penalties on my penalties being late basically.

I had to pay interest and penalties, a few hundred and £736 respectively. Secondary penalties were a few hundred quid.

I started self assessing and the first year (2017) I was still playing catch up (meaning that they could not yet tax me prospectively) so i had a bill for £1650. They demanded £30 interest on that bill even though I pleaded with them to waive it because it was unfair making a demand for payment plus interest, i said they should have let me know about the bill a few weeks earlier so that no interest would have been incurred!

They also snuk in another penalty but one kind senior lady reneged on this as it was a total error on their part.

The next year I self assessed was 2018 and £600 was owed. Luckily they agreed to spread it over my tax via my tax code.

This year fingers crossed it will all be totally prospective and adjusted in my tax.

I turned into a weepy, neurotic wreck having to deal with different people on the phone, all using different systems and telling me different things. I felt so helpless each time they discovered a new owed amount i was just like, here’s the cheque, i’m not even going to look into why this was owed. They are impossible to engage with on a human level.

I was so angry that they had just let me keep on ‘offending’ for five years before realising that I was not paying back part of my child benefit. In this way interest and penalties had just massively accumulated. If they had told me what i was doing wrong I would have rectified it.
They did not accept this. It was back to the ‘should have seen the media campaign’!