Tax Free Childcare and Unexpected Bonus

[RainRainGoAway2020]

Before I start please no snarky comments about how much my DH earns as I have seen on other threads.

We have been claiming tax free childcare for 2 children as we both earn well beneath the 100k limit. However, DH has been given an unexpected large bonus which will push him over by about 2k. I have no idea what this means for the TFC and I can't find any information online.

Obviously we are no longer eligible for the remainder of this tax year - but do we need to pay back what we have received so far? If so, how does this work?

He can likely make additional pension contributions to bring him under the list.

Under the line, sorry.

His company offered that but the deadline for accepting was before they announced the bonus figures. Pretty stupid in my opinion.

DH is being lazy and shrugging his shoulders. I cannot get him to accept that this is something he should be actively trying to sort out.

Maybe phone them?

If they really won't let you contribute into their scheme (most private providers - Scottish widows, Aviva etc you can contribute separately to what your employer puts in), you could set up a sipp with a private provider such as Hargreaves, contribute the £2k and ask to merge it later.

Or you could ask if they will delay the payment to new tax year, though that may not be possible from a payroll perspective

And you remain eligible for the rest of the tax year if you make a pension contribution that will bring you under

This exact situation happened to us last month, I rang the tax free childcare people and they said we are no longer eligible till the end of March but we can apply again in the new tax year if we don't expect DH's wage to go over the limit next year. We may need to ring them to explain the situation rather than rely just on their checks as they do look at previous year's wages when assessing eligibility.
We don't need to pay any money back we have received so far this year so we are just using what we have left in our childcare account to pay nursery fees until we can apply again. Hope that helps :)

There's nothing stopping him from opening a SIPP and putting in a voluntary contribution of £2001. I appreciate it's not easy to just find £2000 lying around in savings but the money doesn't have to come from the bonus iyswim. This would mean you'd keep your allowance and the bonus could repay some (not all due to tax) of the depleted savings pot if one is available.

Before I start please no snarky comments about how much my DH earns as I have seen on other threads.
No problem I won’t use sarcasm. Happy to come right out and ask why you are looking for a legal loophole to claim a benefit you don’t need, especially when others are struggling to eat pay heating bills etc?

DH does have a private pension separate to his work pension. So he could pay 2k into that to take him back under?
How would HMRC know he had done this?

DH is being so lazy about this. I think he would rather lose all his bonus in tax than bother trying to sort it out 😫

You can just ring HMRC and tell them. And you certify with TFC yourself. Most private providers will immediately claim the 20% tax relief so HMRC will know about it quickly, but you can also call them and get tax code adjusted to claim the other 20% rather than file a tax return - at least this is what I am planning to do. I got very little mat pay but a phased return to work bonus so that I had one very lean year and one very good one (where I paid a lot more tax!), so I used pension contribution to keep the TFC.

And @MyDcAreMarvel

It's not a loophole. The government designed the £100k threshold such that pension contributions are deducted. Probably to encourage people to save for their old age - up to £150k where you can't put extra in your pension above £8k

Yes open a sipp and shove it in. He has until 6 April so needs to get moving as money laundering may delay opening of account. He won't need to put the whole lot on its net of tax relief.

Oh just read that he already has a private pension - that's even easier. Most let you make a deposit by debit card. And no, it's not a loophole. The system has been designed like that. OP's husband will pay tax on his pension in due course.

Thanks so much everyone!