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

---

"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."

We had our second baby mid way through a tax year. Filled out the tax return for that year and the child benefit that we had to pay back was calculated automatically. We paid the amount and all was good.

Until this year when we got told the calculation that they did automatically was wrong and that we owed £300 plus interest on top and that interest would continue to be added until it was paid off. The interest part pissed me off the most - it was their systems mistake not ours!

For the record, I e

AFAIK anyone can fill in a SA form. Not paying the right tax is something we are all open to so why should parents be let off for their poor administration?

I agree, they love putting interest on a debt you didn’t even know you owed!

The whole thing cost me about £7000. I didn’t spread the cost buT scrabbled around for overdraft, savings and my PPI money to pay it because I didn’t want to give them a penny more in interest which they would have got if I had asked to spread out the payment.

They allowed me to continue on ‘offending’ because they did not have the sufficient organisation to cope with this massive change.

The child benefit incomes also do not make sense. One person earning over £50/55k upwards gets reduced or nothing. Yet two parents together could earn say £49k each and receive all of it, yet just because one person earns more doesn't mean their partner earns much. The current system is not fair.

Also we both work full time and pay for childcare.

I’m so confused- my annual salary is just under the 50k limit- my bonus takes me just over (if my bonus is consistent with previous years but it may not be). If I go on mat leave for my second I would want to be receiving my CB so don’t want to opt out now. I’m saving it all trying to be conscious it may not be mine. Makes me
so angry, another hassle in life. It’s a way for the government to make yet more money fining hard working people!

As a single parent who is about to tip over the threshold and who receives zero child maintenance I agree with other single parent posters on this thread. The system is the height of unfairness, it is unnecessarily complex, poorly publicised, and discriminatory.

We were not fined but had to do a full self assessment tax return just because of child benefit. It is a far from straightforward process which takes a considerable amount of time to pay a few hundred pounds in tax.

Particularly galling to have to do (and pay) when I knew many other households who had more income than us who did not have to repay. Child benefit is means tested in a very unfair way and unlike any other MTB which is done on household income not the income of one person in a couple. It's unfair that one couple could have an income of £90k and not have to pay but another couple have an income of £60k and not be entitled. Pretty unfair way of doing it imo.

It is actually a scandalous system and really upsets me- it’s worth around £2k a year if you have 2 kids; so not insubstantial.

The principle of individual taxation was won after much campaigning, and was a worthwhile and notable success.

This measure undermined it woefully.

And it is unfair, for it looks at income from a partner/spouse n deciding an individual's tax, but ones not actually reflect household income.

It was the start of omnishambles.

If unaffordable, better to have left it universal, and have frozen the cash element. Any increase to child-related benefits could have gone instead into the means tested ones.

The principle of individual taxation was won after much campaigning,

But most benefits have been "per household" rather than individual, such as tax credits, housing benefits, council tax reliefs, etc.

The real foul up was making the child benefit clawback part of the tax system - you have the granting of the benefit being part of the benefit system, but the clawback part of the tax system - any sane person could see the obvious consequences, but the Libdems just wanted some media headlines at their annual conference!

Yes, I agree KazzyHoward and this deeply flawed cobbling together of the two is precisely why I think this is such a clear example of omnishambles.

Does anyone know if the figure of £50k is what you have earned over the tax year? I have earned just under that due to having one job under £50k and then starting a new one just over in December.

I earned slightly over £50K last year, but put my pension contributions into their ready reckoned, and it said I didn’t have to pay anything back. But should I have been filling in a tax return?

I am also getting a significant pay rise this year, which I have just heard will be backdated to 1 April, and will put my pay up to around £60K. DD left school this year, so payment stops in September, but presumably I will need to fill in a tax return and pay some of it back?

@Redcliff, yes it’s your taxable income over a year.

We were fined.

When the rules changed DH didn’t earn over £50k, his salary gradually crept up over the years. Usually through doing overtime.
I earn about 10k

We had to pay back the CB plus penalties by an agreed date, or they would charge us more interest.

We cleared out our savings and took out a loan to repay.

HMRC tried to persuade us not to claim rather than deal with it through tax returns. The problem with this is that you loose out if your income varies and goes under £60k. It gets even more complicated if you have savings or investments which have to be added into the calculation. Having got it wrong we are having to pay an accountant which in itself demonstrates what a complete mess this is. Normal hard working families should not have to pay an accountant when they are in PAYE and have straightforward affairs.

Having said that, what I am aware of is how dysfunctional the system now is and the knock on unintended consequences.

At work, we have at times additional contracts which can require additional surge hours working. Some staff are very skilled and fall in the late £40k to early £50k salary. I was totally bemused to find some contracts we could not take on because key staff won't work additional hours. Why not, you guessed it. Bad enough the additional overtime pushed them into higher rate 40% tax, but they were having to pay an additional 20% tax (as most had at least 2 children) as a child benefit high income tax. Thus for working additional hours and supporting the company, they had to pay additional tax of 40% making the total tax on additional earnings at 60%. No surprise they refused flat out to do it

Whilst not a child benefit issue, but example of completely screwed tax and benefit system. Friend is a consultant Doctor. Was working previously additional days to clear backlogs so patients got seen quicker. Got clobbered with a massive tax bill for a theoretical pension increase she won't ever get and for exceeding her annual allowance. Guess what...she has stopped working additional days supporting the NHS

Two staff at work. Single parents low income family who get some benefits. Both got promoted at different times. Guess what next. Application to reduce their hours. Why? Not to support child care or work life balance, but because benefits being reduced etc so need to reduce income.

You couldn't make this up in reality. I don't think anyone could have dreamt up and implemented a worse system if they tried. And that doesn't even allow for the complete unfairness of the child benefit high income charge being based on one persons income, so a single parent, albeit with a good salary gets clobbered but a two person household with going on nearly double the income doesn't

I don't think anyone could have dreamt up and implemented a worse system if they tried.

Unfortunately, we've had a succession of incompetent Chancellors, from Gordon Brown through to Osborne (With Vince Cable responsible for some tax howlers), and then Hammond. Each has left the tax system in a worse state than it was when they started. The only half decent chancellor has been Alistair Darling who never really got enough time to make any worthwhile changes and was constantly held back by Gordon Brown throwing his weight around as PM. At least Osborne and Hammond didn't have too much time to do much damage, unlike Brown with his 13 years of foul ups.

DH earns £50k and gets a couple of bonuses that puts him over. I earn £21k.

Due to bonuses and some shares he sled assesses each year and we have had to pay some back.

I still don't get why he could earn £49k and so could I and still get it. Why can't they work it out?

Hello

Thanks very much for all of your thoughts. We've had the below response from Craig Mackinlay:

“Dear Mumsnet Community,

I’d like to thank you for the contributions you made to this thread. It was interesting and informative to read about your experiences, and they helped to aid my understanding of the issues ahead of the debate.

Clearly there are serious issues with the system as it currently stands. Many of you found it very confusing, complicated and unfair. Some others chose to opt out of the system entirely, rather than deal with the stress, complications and risk of fines. This echoes some of the experiences relayed to me by my constituents.

If you’d like to read through the transcript of the debate you can do so on Hansard, or watch it on Parliamentlive.tv. You’ll be able to see the points raised by myself and colleagues from other parties, as well as the response from the Jesse Norman, the Financial Secretary to the Treasury. The House of Commons Library have also written a useful briefing on the topic.

Thank you again for contributing to this discussion. I’ll continue to advocate for those affected by the high income child benefit charge and press the case for solutions.”

Perhaps someone could answer this: the person earning over 50k completes their self assessment form. Because they PAYE this benefits (car) are included in the figures on their P60. They pay the tax for it through the PAYE system.The form doesn't allow for that though so to get the correct figures out they have to declare that they don't get any such benefits. That means they have to make a false declaration but with the sole intention of getting the correct figures so not intending to make any gain. If they added the car info it'd give the wrong figures and say they owe tax they don't.
What should they do?

The self assessment form doesn't work for PAYE tax payers. This it's a ridiculous way to administer this system.

My Experience with the HICBC

I informed the CB office back in March due to a pay rise I was over the threshold and asked for CB to be cancelled immediately which they did. At this point I was unaware of the law change that occurred back in 2013. I thought no more about it and thought that was it.

I am on PAYE

On 30.09.19 I received a letter out of the blue from the HMRC regarding tax year 17-18 asking me to confirm my income from my P60 along with the total amount received in CB as I may have to repay some or all of the CB received. Complete panic set in as I only then learned after searching google that the law had changed and after checking my P60's I would be affected for the last 4 tax years!!

Yes, they was only asking about one year in the letter but I wanted to be upfront and honest and confirm all years where there was a unintentional claim.

I contacted the CB office on 01.10.19 to and asked them for all the amounts I had received for the past 4 tax years which they gave me over the phone.

Next I contacted the HMRC to acknowledge the letter and advise them I souring my P60's and will call them back after I have used the online calculator (as recommended in their letter)

Whatever you do DON'T IGNORE THE LETTER call them and acknowledge it, I do believe this will help your case.

I called the HMRC back today and we went through the information over the phone. So it is a pain, but it transpires due to overtime I need to repay £5,370.00 BUT I was honest, I stated in every call I made (there were 3 in the last week) I was unaware of the change in law as at the time it came in I was way under the threshold and therefore would not have received a letter warning me I could be in breech of the law.

She asked what made me cancel the CB in March to which I confirmed by pay rise took me of the threshold by a couple of hundred quid.

The lady I spoke to was extremely helpful. I now have to wait up to two weeks to receive the disclosure notice and then the next question is payment terms. I am hoping they will allow a period of time for this. Will update on here as and when that is confirmed.

They did not issue me with any penalties as they agreed that I did not intentionally claim knowing that I was not entitled.

The next part is that I will need to complete a self assessment for the 18-19 year only, if done by 31.10.19 (although not due until 31.01.20) they will allow you to spread the payments whereas if you leave it until 31.01.20 they will want the payment in full there and then, again the lady advised me to wait until I receive the disclosure notice and I can call them back for help with the self assessment for the last tax year.

Overall I can say my experience was not as bad as what I was expecting as long as you are honest with them they (well in my case) come across as trying to help you.

update - so HMRC have confirmed amount over paid and allowed me to repay over 12 months for previous three years. The last Fin Year will be deducted from my salary monthly from April 2020 over 12 months.
Yes no great as a rather large amount to pay back £5500.00 in total but throughout the whole experience they were extremely reasonable. Maybe I just got lucky.

You had to pay it back within 3 months? That's shocking.
We have just received notification - had no idea that we had to do this and we now owe £2.5k and I could never pay it back within a year let alone 3 months!