DH and child benefit

[daisiesonmydress]

DH taxed income has just gone over 50k. Probably coming in on his P60 at 52k. We claim child benefit for one child.

Will HMRC notice if we do nothing?

@daisiesonmydress

Yes. We didn't understand the pension payment to reduce the taxed amount. Probably too late for this year but will do for next year.

I think you get fined if you don't do a self assessment.

Why too late? You have 2 months!

It makes much more sense the pay the extra £2k into a pension. You get tax relief on it and you won't lose a proportion of your child benefit.

The only thing to be careful about if considering extra pension payments is the annual allowance. If you are in a final salary scheme this is calculated on the notional increase in a fictional pot and has no relationship with the amount paid in. When your salary increases this can cause problems (far greater than paying back child benefit) and needs careful checking of allowances over several years to determine if there is any room for additional contributions.

@LIZS

No you cannot take one year's liability over into following year. Each tax year is separate.

I thought so. Thank you for clarifying

For mine, I do a self assessment and for years I'd been paying the whole lot back.

This year I realised a couple of things. Firstly when you pay 40% tax, and you've made pension contributions you automatically get pension tax relief on 20% but have to tell HRMC about the other 20% for them to credit it back.

Secondly if your husband has worked at home this year, there may be tax relief on employment costs.

Either or both of these could apply to reduce the amount to return this year. Worth reading up on it or contacting the tax office to ask for advice.

Is the £52k before or after his pension contributions?

He only needs to repay some CB if he's over £50k after pension contributions, assuming he doesn't have P11D benefits like a company car. To check, use the HMRC link above to calculate his 'adjusted net (gross) income' which is what the CB entitlement/payback is based on.

If necessary, he has 2 months to the end of the tax year to increase his pension contributions so he doesn't lose CB, but that could involve giving up a lump sum that you might not have, but if he's likely to continue earning over £50k, it's probably worth planning for this going forward.

On the matter of self assessment, for this tax year (2021/22) he has until the end of January next year to do a self assessment, but he should get it sorted sooner as it can take a while register and set everything up.

But once he's registered, it's really very easy. All you have to do is tell them you're doing the SA to repay CB and they only ask you to complete the relevant screens with a few questions and that's it.

At worst, assuming he can't increase his pension contributions, he'll have to repay 20% of the CB received, so definitely worth a bit of admin to stay on the right side of the law and HMRC and he'll probably be able to repay the excess amount via his tax code.

We had the same. Dh was contacted by HMRC. We then had to get a Gov gateway log on.

It's similar to being self-employed and having to submit a tax return. But as soon as you go in it clearly states instead of being self-employed and submitting a tax return are you submitting because you're a PAYE receiving child benefit and have gone over the threshold?

you tick the box and it takes you through, you declare your income from your p60, and how much tax you paid. and how much child tax benefits you have received in the last year, from April through to April, and it calculates it. We receive about £140 per every 4 weeks. Please remember it's every four weeks not monthly that you are paid it, and that makes a difference. So about £1500 received. Had to pay back £185.

DH earns over £60k but pension takes him below. We do self assessment and each year the tax man seems to owe us £150ish. Never understand how haha.

The form takes literally minutes to complete once set up.

@Nidan2Sandan

DH earns over £60k but pension takes him below. We do self assessment and each year the tax man seems to owe us £150ish. Never understand how haha.

The form takes literally minutes to complete once set up.

@Nidan2Sandan can you do my return next year :)