Child benefit and high earner

[serialplanner]

Anyone got experience of child benefit?

I am a higher earner but for mat leave from March 2021 I will only earn statutory mat leave payments so I will not be for that year.

My husband is not a higher earner.

My thinking is we can claim it for the year of mat leave but then cancel any future claim as we won't be eligible when I go back to work.

Too simple?

You have options
Claim just now and keep claiming when back at work. You would then do a self assessment tax return to pay some back if you earn £50-£60k and all would be paid back when you reach £60k

Claim just now and if you go on to earn over £60k then keep the claim but opt out of payment so you don't need to pay any back

Its always worth claiming even if opting out of payment. If there is a lower/no earner it can help protect NI credits against their pension and it means your child automatically gets their NI number at age 16

Everyone is entitled to claim it but a high earner in the household would have to pay some or all of it back. As I said you can opt in and out of payment depending on whether you want to complete a tax return or not

Definitely start claiming it.
Once your taxable salary goes above 50k (so, subtract pension and maybe childcare vouchers - not sure how the new vouchers work with taxable pay), you can do a self assessment tax form, and get it adjusted. Once taxable pay is over 60k, you can either claim, and pay back each year, or put the claim on hold. It is certainly worth getting in the system initially.

I claimed it and pay it back by completing a tax return (fairly simple if you’re PAYE). My tax code now allows for it each year so the repayment comes out over the year. It meant when I was on maternity leave with DS2 there was no fuss. I sometimes think that now I should stop it but you never know what’s around the corner.

You can still claim but opt out of payment. That's what we did.

I'd claim it anyway and pay in back in your tax return in years you're not entitled.

You never know what might happen in the future and call me a cynic, but I think it will go altogether at some point, possibly with existing claimants retaining it.

The pension credits are worth having in uncertain times.

Honestly for one year its a massive PITA. But, free money! I hated doing tax returns even though most of it is filled out for you. Im an accountant!! How about claim it for one tax year only. Set it up to cancel so that you are not claiming it once you are back to earning over £60k.

Otherwise you could get your tax return in early each year and make sure the repayment comes off your tax code. Paying it back in one is a bit annoying, especially as I put it in a separate account for the dc so I'm worse off in my own account.

If you were planning on having 2 (or more!) maternity leaves this would be worth doing and then cancelling after your last mat leave.

Also if mat leave or going part time reduced your salary below £60k then it would be worth it.

Thanks this is so helpful.

I forgot it's taxable not gross so we have our student loans and pension payments too.

I'm on £53k and he's £42k plus his bonus £45k.

I thought it was only one of you that triggered the £50/60k limit?

As our baby will arrive in March it should be easy (she says) to claim this coming tax year 2021/22 and then set a reminder to review next April/when I go back to work in March.

Thank you

I’d claim it for year you are on mat leave, then swap it to your husband claiming child benefit but opting out of paying. This is because he is the low earner and if he ends up part time or out of work, the child benefit will protect his NI contributions until the child is 12. He is also most likely to take time off and be a SAHP if you go on to have more children.

Oh, just seen your update. You are higher earner but not by as much as I was envisioning. So it doesn’t matter who claims it really.

Yes it is based on 1 high earner not household income. You basically pay back 10% for every £1k over £50k so £3k over you'd pay back 30%

We claim and pay back via tax return. It tapers from £50k to £60k.

The infuriating bit for us is the whole household income is less than £60k, but DH earns the majority of it pushing us into that pay back bracket....

Also, not claiming child benefit will have a consequence for the child, as they will not be automatically issued with a National Insurance number when they reach 16. This will mean the child will need to actively obtain one and they may need to undergo a face-to-face interview to do so.

Couples liable to the HICBC are instead encouraged to claim the benefit, and in order to avoid having to pay it back and file a tax return, you can opt not to receive payments. This is done by ticking a box on the child benefit claim form (Question 68, Section 4) or, if child benefit is already in payment, by completing a separate form.

www.litrg.org.uk/tax-guides/tax-credits-and-benefits/child-benefit/high-income-child-benefit-charge#toc-i-m-on-a-low-income-and-my-partner-s-income-is-over-50-000-how-does-this-hicbc-affect-me-

Claim, then fill in a self assessment as a high earner to pay it back via next year's tax code.
You may find you're eligible for some of it anyway based on your salaries. And who knows what will happen in the future. Better to be in the system.

Yes claim it and do a tax return. If you do it early they'll adjust your following tax code so will recoup any money you owe gradually.
Otherwise you'll get a bill to pay I do mine online.

Thank you all! Final question if anyone remembers - claim once baby is born? Just thinking I'll be sleep deprived and useless soon!

Yes you cant claim CB before birth

When my youngest was born (nearly 8 years ago) the local area had a system where the CB claim was submitted at the Register Office. (Do you didn't have to send on the birth certificate)

I earn over the threshold (about the same as you) and I claim child benefit. I initially kept about half of it back in case I have to repay anything.

However if you make additional pension payments it reduces your "taxable wage" for CB purposes. So I make additional pension payments and get to keep all the CB.

www.moneysavingexpert.com/news/2013/10/child-benefit-deadline-for-higher-earners-looms/

"I earn between £50,000 and £60,000. How can I calculate the reduction?

If at least one parent in a family earns in between £50,000-£60,000, they will still get the full child benefit. However, they'll pay extra income tax to reduce the gain.

This will be charged at 1% of the total child benefit per extra £100 they earn over £50,000 a year, and will be based on the salary of the highest earner of the two. See the HMRC website for how to calculate this.

However, if you earn over £50,000 and put money into a private pension plan, or ask your employer to sacrifice a portion of your salary in exchange for childcare vouchers or additional holiday, then the amount you get in child benefit is calculated based on your headline salary after these deductions.

So if for example, your salary is £54,000, but you pay £4,000 or more into your pension each year, you will still receive full child benefit and will not have to repay any of it. High earners may choose to contribute more to their pension or to pay for extra holiday in order to receive the full amount of child benefit."

@YepCuntyIsTaken thank you!

So for the year of mat leave I should be fine and then I will contribute more to my pension or get the childcare vouchers to bring it down if I'm still on that wage.

@serialplanner

Thanks this is so helpful.

I forgot it's taxable not gross so we have our student loans and pension payments too.

I'm on £53k and he's £42k plus his bonus £45k.

I thought it was only one of you that triggered the £50/60k limit?

As our baby will arrive in March it should be easy (she says) to claim this coming tax year 2021/22 and then set a reminder to review next April/when I go back to work in March.

Thank you

If you are on 53k, it’s perfectly possible that pre-tax deductions such as pension payments, bike to work scheme or childcare vouchers will bring your taxable salary under 50k so definitely claim it.

[quote serialplanner]@YepCuntyIsTaken thank you!

So for the year of mat leave I should be fine and then I will contribute more to my pension or get the childcare vouchers to bring it down if I'm still on that wage.

[/quote]
yes!

And its tax years, so depending on when you go back to work you might still earn less than £50k for a while after your return.

In the year you do earn over £50K you need to make the pension payments before the end of that tax year - I make a diary reminder.