Feeling stupid and sick - Child Benefit Charge

[blueshiningsea]

By way of background, spent 10 years in a low paid job in the public sector. 3 years ago I bagged a dream job with a salary just under 50k p/a. Salary has increased year on year. I was reading a magazine last week and it talked about Child Benefit Charge for those earning 50k plus - where you had to pay back the Child Benefit up a sliding scale up to 60k pa where you don't get any. My DH earns less than me, under 40k. Unfortunately my DH has been putting our Child Benefit into our 4 children's' bank accounts for saving for Uni and they are the type of accounts that you can't get money out of again. I rang HMRC immediately and on their advice I did a self assessment today for the 3 years where we have been mistakenly receiving full child benefit and we owe £6k!!!! I feel sick and very very stupid that I missed this (no excuse I know), I think it was because it came into force when I was earning a lot less and so didn't register as being applicable to me. Our savings are less than 6k as we have just had some work done on the house, and we've committed to some expenses next year (holiday and school trips) but very worried about money and (although not catastrophic) won't be able to buy much for the kids for Christmas now. Think HMRC do some sort of repayment scheme, but with interest? Would this be the best way to sort this? Just wondering does anyone have any wisdom or practical words of advice?

Can't you move the Child Benefit to your husband's name as he earns less than £50k?

And we have a winer! Puggalo is first past post on let’s have a go at the salary! We

@ritagcabrita can’t do this. It’s based on household income

It's a stupid system. For example 2 people earning £50k each can claim the whole amount whereas one person earning £60k doesn't get a penny.

There are some utterly absurd examples like this

www.theguardian.com/society/2019/nov/09/child-benefit-father-gets-sent-shock-6000-tax-demand?CMP=Share_AndroidApp_Other

Where HMRC are chasing someone for repayment who wasn't even claiming it!

@ritagcabrita

Can't you move the Child Benefit to your husband's name as he earns less than £50k?

Not how it works.

Why do people get child benefit? I really don’t understand why we are all paying for this..

@Difgkdjfjffjsjs

Why do people get child benefit? I really don’t understand why we are all paying for this..

You really can't understand the concept?

Have a look into the history of child benefit/family allowance.

Family allowance was introduced to ensure that mothers were able to feed their children, when their husbands were paid in cash and went to the pub/bookies on the way home on a Friday night. It was there to stop children starving and living in rags.

My df was one of those 'fathers'. We were a family of 7 and we would have starved if it had been left to him.

Child benefit is the modern day equivalent. Maybe you need to walk a mile in someone else's shoes !

@Lollypop701

And we have a winer! Puggalo is first past post on let’s have a go at the salary! We

@ritagcabrita can’t do this. It’s based on household income

It's not having a go at the salary, it's a genuine question. How can a family with nearly £100k income be worrying about money

Although I suppose big mortgage and childcare for 4 DC might not leave a huge amount of disposable income.

But £6k owing sounds a lot when you earn less than £60k OP. What is your 'adjusted net income' which is what counts, based on pension payments and any benefits like a company car, but before tax/NI.

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

@blueshiningsea

The very nice lady at HMRC recommended that we continue to receive the Child Benefit and put it aside as because my salary isn’t over 60k I shouldn’t get the full deduction

It isn't worth it to be honest.

As a PP said, you can claim, but not receive it. We've done this, so when I get around to doing my return, I shouldn't owe anything.

This year, the buggers should owe us, as we're now WFH.

Don't panic

1. Make sure you've filled in the SA correctly, using figures from P60 and P11D. But it sounds like you have
2. Call them back to understand repayment options, only they can tell you this
3. Stop putting 100% of CB you receive in inaccessible accounts
4. Be prepared to review your spending. You do have a very high household income

But please don't panic. And going forwards you'll need to do SA every year. It is a truly terrible system

@MintJulia

Family allowance was introduced to ensure that mothers were able to feed their children, when their husbands were paid in cash and went to the pub/bookies on the way home on a Friday night. It was there to stop children starving and living in rags.

My df was one of those 'fathers'. We were a family of 7 and we would have starved if it had been left to him.

Child benefit is the modern day equivalent. Maybe you need to walk a mile in someone else's shoes !

I think it should still be available to mothers who don’t earn over 50k as many can suffer financial abuse and witholding of money by their partners.

If OP is In a standard auto enrollment scheme like Nest, these are taken from net pay and the tax relief claimed rather than at source so her P60 figures will be correct.

Worst case scenario you offer to pay it back £100 a month for a while.

I am surprised on 100k you aren't really saving though. Are you spending your whole income every single month? I think thats risky in itself.

Sorry to derail this but it’s made me think!

I earn £50800 a year (for the last 3 years) and still get my whole child benefit for my two children. I naively assumed that the CB would be automatically adjusted if needed.

I’m a teacher and pay my contribution of £418 a month to my teachers pension. It doesn’t show on my P60 though it is on my wage slip. So this is over £5000 a year and takes me well below £50000. Is this how it works? And do I still need to do a SA return?

Thanks!

@WholeClassKeptIn

Worst case scenario you offer to pay it back £100 a month for a while.

I am surprised on 100k you aren't really saving though. Are you spending your whole income every single month? I think thats risky in itself.

Doesn't sound like it, sounds like they have saved a good chunk then spent it on house improvements. OP ask them about repayment plans or consider an interest free credit card. You won't need to pull out the full 6k before Xmas

@ritagcabrita

Can't you move the Child Benefit to your husband's name as he earns less than £50k?

That will not help as OP will still need to pay the high income benefit charge as she is the higher earner

@blueshiningsea

I was on phone for 1hr 10 mins trying to get through to HMRC so need to have all the info at my fingertips when I need try ringing

I can’t give any advice on figures, all this is over my head as I am not even close to being a high earner but have the number ready on your phone and on the dot of 9 am press dial. I always do this when dealing with benefits and never have to wait.

@Lollypop701

And we have a winer! Puggalo is first past post on let’s have a go at the salary! We

@ritagcabrita can’t do this. It’s based on household income

No it isn't. Its based on an individual earning over £50k. You could both earn £49k and not be liable but as soon as 1 person earns above the threshold some needs to be paid back

MintJulipa
I think it should still be available to mothers who don’t earn over 50k as many can suffer financial abuse and witholding of money by their partners.

It IS available to a parent earning less than £50k.
If their partner earns more than £50k then it is the partner (highest earner) who has an additional tax charge to repay the CB.
The lower earning parent is entitled to claim and has no liability for the repayment.

Honestly just call them and sort out a repayment plan this isn't the end of the world. Remember to use the phrase "financial hardship" until you reach a monthly figure you can afford.

@Stygimoloch

Sorry to derail this but it’s made me think!

I earn £50800 a year (for the last 3 years) and still get my whole child benefit for my two children. I naively assumed that the CB would be automatically adjusted if needed.

I’m a teacher and pay my contribution of £418 a month to my teachers pension. It doesn’t show on my P60 though it is on my wage slip. So this is over £5000 a year and takes me well below £50000. Is this how it works? And do I still need to do a SA return?

Thanks!

Is the £50800 before or after pension contributions?

The figure on my P60 is my salary after my pension deductions, which are not itemised on the form.

Therefore if your annual salary is £55/56k and you receive £50800, you will have to repay a small amount (just under 10%) of your CB for the last 3 years and going forward, so should do this via self assessment.

If your salary is £50800 and your P60 figure is around £45k, then you don't have to do anything unless your pay rises to above £50k after pension deductions.

@BarbaraofSeville it’s my salary before pension contributions so it sounds like I’m ok? I honestly didn’t realise it was down to me to do anything! I feel a bit daft now. Thank you!

Thanks all, I think I was feeling a bit delirious last night due to covid and the shock of owing this amount of money but in the clearer light of day I will follow the helpful advice on her - which is much appreciated. I have to wait 72hours after submitting my SA returns before HMRC confirms the provisional amounts owed, and then will ring them and sort out a payment plan. And yes, will explain my circumstances and hopefully a realistic amount each month. I am minded to cancel my CB as seems to be causing more hassle than it’s worth, including completing annual SA and having to keep the money aside in case I need to repay. Normally this wouldn’t have felt like such a catastrophe but as I mentioned, we had saved regularly but recently had some essential work done to the house (obv not being aware that we owed this amount else we wouldn’t have done it) which had depleted savings. Although it seems like we earn a lot, we have to run two cars to get to work and 4 children are expensive (the last two were surprise twins). Will just have to knuckle down, reduce our spending (mainly kids clubs like scouts subscriptions, swimming lessons and after school care so I can work) and agree a sensible repayment plan and maybe sacrifice our holiday next year and lose the 300 deposit. I’ve googled cheap but bulky stocking fillers and hopefully kids won’t notice that their Christmas is impacted.
To be honest tho, feel a bit cross as HMRC must have had the data about my salary and being in receipt of CB but didn’t think to notify me over the 3 years and I had to find out by reading a magazine. I know ignorance of the law is no defence but still makes me a bit 😡
Anyway off to make a strong cup of tea. Thanks for all the helpful input

I don’t think you can blame HMRC here. People can mitigate the charge in many ways, which are not immediately visible to HMRC.

They could end a letter out to everyone in receipt of CB with a warning. Every year. That’s a lot of letters. As a taxpayer, I’d prefer the onus was on people to check their own situation.

I do feel sympathy towards those who last added a child before the change though. But from 2013 onwards, the £50K detail is on the claim form. If people don’t read that, they’re not going to read the annual costly letter from HMRC.

Incidentally, it’s very quick to set up a private pension, and you might want to calculate what pension payment you need to make offset the CB overpayment already received this year. You’ve got until April to pay that in, so whilst money is tight now, it’s worth looking at - especially if you get the bonus you mentioned between now and then?