Make too much for child benefit? Advice?

[Confusednoodle]

I’m hoping someone can offer some advice. I’ve just got a job that’s over the High Income Child Benefit Charge threshold of £50,000 (new job is £62k + bonus). From looking at the government website I see I will either now be taxed for my child benefit, or I can opt out of the benefit altogether. How do I figure out which makes the most financial sense?

We have 2 children we recieve CB for so £145 a month currently. Partner only earns £12k a year so I do think the policy is unfair - if we were earning the same but split as £37k each we wouldn’t have this problem. But there we go. Is anyone else in this situation and what do you do?

Hiya, I had this issue as my DH earns over the threshold, but after a lot of research and a lot of thinking we decided not to claim the child benefit because you have to do your own tax returns to pay for the tax on the money you receive, and it actually works out that you end up paying the same in tax as what you receive so it didn't make sense to have the stress of trying to remember to do the tax returns when you're not actually getting any benefit.

Hope that makes Sense, and helps!

I was told you pay it all back if you earn over 60k, so we decided it's not worth it. Important to register still though, so they get an NI number!

I’ve recently not been entitled due to my husband starting to earn too much but I was told I should claim it and then pay it back as then I’m still entitled to national ensurance contributions. Is that not true?!

Thanks both, very helpful. I did the website calculator and found it very confusing, but I think it would be best for me to not claim CB anymore.

Especially since my bonus would be in December but we don’t know the amount in advance, so I wouldn’t know if it was worth claiming for the previous year, so I could end up being taxed even higher. All very annoying.

Shouldn't your dh if your kids are under 12 claim the chb in his name so he gets the ni conts? Then you do the tax return?

Hi same situation. We looked into it and dobt claim as would have to pay it all back at end of year and do taxes.

That is true, but that's only relevant if you are not working or making national insurance in your own right. If you are a sahm then you should definitely claim (in your name) and get the contributions for your pension.

You can register for CB so you get the NI contributions for children under 12, but then not claim it. Easier than having to do tax returns.

You submit the tax return by end of January for the previous financial year - so January 2024 for the current tax year to April 2023. If you are only now increasing salary it is probably worth continuing to receive payments and doing the tax return as you may be borderline for repaying any after deductions for pension etc due to being more than halfway through the financial year.

Opting out of child benefit:
www.gov.uk/child-benefit-tax-charge/stop-child-benefit

You need your Government Gateway account.

If you are in the position to do so, you can increase your pension contributions to get under the threshold.

If you are in 62k and pay into a pension now, it's likely you are going to be under the 60k threshold so will be eligible for some of the child benefit. You would have to pay back the majority but something is better than nothing, right?

I'm in the same position where child benefit will start to be clawed back from this year due to a pay rise, but I should have enough freedom to try and mitigate this with extra pension contributions.

If you divert £13k pa into your pension pre-tax then you will be back under the £50k threshold. You can live perfectly comfortably on £50k from you plus £12k from DH plus CB.

When I went up to £55k it worked out that it was still worth claiming but 50% needed to be paid back. I need to do the calculation again as I am now on £65k so I assume its time to opt out.

Is it not 50k plus net? Is your net or gross 62k?
Can you not bump some into pension/childcare vouchers to put yourself under 50k net?

I’m not sure how I’d go about doing this to be honest. The pension will be 6% contribution already. Surely I’d have to put quite a lot more in to get it under £50k? Would the company let me? I’m guessing they wouldn’t still match it. I’ve always been in NHS pension up til now so not really sure how it works with a private pension.

And what if I then get a £6k bonus at the end of the year and go over the threshold again? Not saying I will get a bonus that high each year - or ever! But it is a possibility.

Also I’m only youngish (20s) so not sure it makes sense to put so much into my pension now when we could use that money for saving for a bigger house etc?

I really am a bit clueless what would be best.

@Alarae its a £50k threshold

I don’t think childcare vouchers are a thing anymore?

I will be using the government tax-free childcare scheme but not sure that makes a difference?

It is a sliding scale between 50 and 60k, so you don't repay all unless your net income is over 60k.

I thought it was 50k after the tax free allowance?

I just claim it and then do a tax return and then it's automatically taken back from my tax in the future.

If the worst happens and something takes you under 60k for any financial year it would have been worth it. EG if you unexpectedly become unemployed, go part time, maternity leave etc.

Similar situation here and decided to continue to claim but it goes straight into a savings account and then is paid back when DH does his tax return. I was also concerned about how much hassle it might be if we chose not to claim but then circumstances changed and we needed to claim again, the way we currently do it is no real hassle and we make a teeny tiny amount of interest on the money!

This is how I understand it works too. After £60k you pay it all back but childcare vouchers used to be deducted so did a while I just paid the tax because it brought me under £60k.

OP-yes, it is an unfair system-particularly for single parents who earn over £60k because two people can earn £49,999.99 each and pay nothing back at all!

I claim CB for the NI contributions only (so opted not to receive the money from CB) because my DH earns well over the threshold and it wouldn't make economic sense as he'd be taxed the amount I'd receive. Our incomes are shared anyway so it didn't make any sense to us 🤷

I think they still exist if you had a child born before 2018 (?) and had signed up then but now it’s tax free childcare which works differently and I don’t think you can divert loads to that account to avoid tax/stay under a threshold in the same way.

it seems madness to me to pay £13k in to a pension to ensure you can claim £1k ish per year in child benefit 😂 especially if you are young and need the money now. Fine if you are nearing retirement age and will benefit soon (my dad did this as a high earner in his late 50s to avoid paying 40% tax) but he benefited within a few years. You’ll be waiting 40 years to see it back!!

If your DH is on £12k is he earning enough to be paying NI to get full state pension? It might be better to put the CB into his name but just don’t claim the money.