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Original poster

HMRC Mandatory review - tax free Childcare

34 replies

LeiLeiLeiLei · 12/04/2023 09:19

Anyone had experience of HMRC mandatory reviews regardless of topic eg child benefit / tax free childcare etc?

Just went to 102k for this tax year and instantly said I was not eligible due to income when I reapplied. I paid 4k private pension (so 5k grossed up) in March to get me under the 100k adjusted income.

However there seemed to be no way of informing them in advance. I had to send off a mandatory appeal on this. Anyone been in similar circumstances? How long do they take to assess and will they agree with my reasoning?

Thanks

OP posts:
cloudonego · 12/04/2023 09:50

I'm not sure OP, I'm a bit nervous as I am now completely out of range for child benefit but have opted to keep receiving it and return end of the financial year in a tax self assessment for a few different reasons, I hope this is ok to do!

Original poster
LeiLeiLeiLei · 12/04/2023 11:13

Hi, not an expert but sounds like you are fine for this year. Will you be able to choose the same next year (receive and return ) orchild benefit will just stop?

OP posts:
MudandParsnips · 13/04/2023 13:55

Hi OP, no experience but I'm in a somewhat similar position and pretty worried about it . I've been granted some shares (RSUs) at work which has somehow been put through as a payslip for £10k (although I haven't received any money) and has pushed my full year income to £102k, so I'm really worried about having to pay all my claimed tax free childcare/30 hours back... I've asked payroll what the payment is as I've only just seen it in my payslips.
Regarding the adjusted income, that's a good point, as I sacrifice 4% into my workplace pension, which I think takes be back under the threshold. What have you had to supply for the review?

FishChipsMushyPeas · 13/04/2023 13:59

If your gross income is in excess of £100k then you will be required to complete a self assessment tax return anyway, wouldnt you? So you will declare your pension contributions etc on there as well.

Teapleasemilknosugar · 13/04/2023 21:32

We're just coming into this position. DH gross income is just under 100k but expected to rise before the end of the 23/24 tax year - so when do we say when answering the question if it about the whole tax year? Also with his benefits package and car etc, it takes him over 100k already. We're looking into salary sacrifice into pension, but in the meantime do the value of a benefits package count towards the 100k threshold? It's so confusing!

WonderWoop · 13/04/2023 21:36

@MudandParsnips the £10k - could this be older shares that have vested and you've sold? I have received payslips when I've done that and they counted as income

WonderWoop · 13/04/2023 21:37

@LeiLeiLeiLei if I've understood your question correctly, do you mean a mandatory reconsideration? My friend had this for UC but went against her. Still believe they're wrong and they've ignored some important info so have appealed to court. This is free to do and quite straight forward. Appeal hasn't been heard yet.

MudandParsnips · 13/04/2023 22:55

WonderWoop · 13/04/2023 21:36

@MudandParsnips the £10k - could this be older shares that have vested and you've sold? I have received payslips when I've done that and they counted as income

Thanks! Yes, looking into it, I think it's for shares that have vested, but not sold, as a way of paying tax?! All so confusing and there's no info anywhere from my company on how they do these things. I've asked HR but they haven't got back to me, and they're usually pretty useless with things like this. The last time I had a similar query I was told I needed to seek independent advice..

springvibes · 13/04/2023 22:59

Had this happen to me. They stopped it as soon as income looked like it would go over £100k, despite me all along making pension contributions that took me well under.
I submitted the appeal (evidence of pay, pension contributions and a full year forecast of this) and was successful, and the tax free childcare has started again. Currently trying to claim back the tops ups I missed out on!

springvibes · 13/04/2023 23:02

Just to add it probably took about 4-6 weeks to get the decision so not too bad!
Over 3 months later I'm still awaiting my top up correction! You have to put a request in for this, I was fobbed off twice it would be done automatically!

Original poster
LeiLeiLeiLei · 13/04/2023 23:34

@MudandParsnips I would say have a look at your March payslip (or 1st April) which ever is the closest to the tax year end and see what your gross income to tax is? If you have salary sacrificed to pay into your work place pension then this will be excluded from your gross salary / taxable income but it should be obvious on the pay slip. If you are still over 100k (due to the shares or otherwise) then you can pay additional sums (AVC) in work or private pension to take you back under 100k again. However , there might be some timing delay as HMRC wont know that you did an AVC so your income will still be over 100k . This is what happened to me i made AVC to private pension to take below 100k but HMRC dont know this so still see me as over 100k. Wish they allowed me to explain rather than a straight "you are no longer eligible"....

OP posts:
Original poster
LeiLeiLeiLei · 13/04/2023 23:37

@FishChipsMushyPeas yes a Self assessment is required but that is not done straight away. I will wait for my P60 and P11D so i know the figures to put in alongside my pension and anything else.

However they have stopped my use of tax free childcare and not approved the latest quarterly application. Therefore there is a disconnect.

OP posts:
Original poster
LeiLeiLeiLei · 13/04/2023 23:39

@Teapleasemilknosugar
Yes any benefit in kind is deemed the same as salary so they need to be added on to determine the total income. Safest way is to salary sacrifce into pension so the salary + BIK is less than £100k.

OP posts:
Original poster
LeiLeiLeiLei · 13/04/2023 23:44

@WonderWoop @springvibes
For some reason it appears to be called mandatory review for tax free childcare. Sounds like i am in similar position to spring vibes. Just frustrating to be stopped when i am within the rules for it. i quoted the total pay as per my HMRC Government online gate way, rules for adjusted income as per HMRC website and a schedule of the pension payment.

OP posts:
toddlermum27 · 13/04/2023 23:50

We applied, they rang us to query if we were eligible, we explained we would pay into pension to ensure under 100k, they accepted this and it all went through. No proof needed.

Rooma · 14/04/2023 00:10

This happened to me last year. I explained that I'd put money in private pension to reduce taxable income but ended up not being able to use tfc for a few months. As soon as my tax return was submitted I called them up and was able to start using it again.

My income was a lot higher that year though through a combination of generous redundancy pay and an extraordinary bonus payment... the payment into pension was in the order of £50k so I looked way over.

Original poster
LeiLeiLeiLei · 14/04/2023 00:10

@toddlermum27
I applied, automatically rejected due to income which I think they just referred to my march payslip as a basis for over 100k. Called helpline to explain about private pension and they said I had to go to Mandatory review as rejected already.

OP posts:
Original poster
LeiLeiLeiLei · 14/04/2023 00:15

@Rooma did you apply for mandatory review? Did you get back any TFC that was missed or it wasn't that long till u submitted tax return? When you reapplied did you just apply in the same manner as originally via website?

OP posts:
Rooma · 14/04/2023 00:34

I went through a review but wasn't successful. I reapplied via the site some months later and in a quick phone call was reinstated.

Was not aware that you can claim back fees that were lost- this wasn't ever mentioned to me. I've got one child and use tfc for after school care only so I didn't lose a huge amount. Definitely recommend moving forward to see if work can contribute more to work pension so you're taxable income stays below threshold. That's what I'm doing this year and I anticipate it'll be much more straightforward.

Original poster
LeiLeiLeiLei · 14/04/2023 03:48

@Rooma what happened when you reapplied? Did they contact you or ask you to call them?

OP posts:
Rooma · 14/04/2023 04:10

They asked me to call them and it was resolved in one call

MudandParsnips · 14/04/2023 06:51

Thanks @LeiLeiLeiLei!

Original poster
LeiLeiLeiLei · 14/04/2023 06:55

@Rooma just to check the month where they stopped it and when you found review unsuccessful?

I got stopped in March and awaiting the review. If unsuccessful I am worried reapplying in say August I would get auto rejected again. "Auto" means I receive an email simply saying your income is too high...

OP posts:
Sauvignonblanket · 14/04/2023 06:58

I had a review when they thought I was about to go over (I wasn't). It took 6 weeks ish and I was able to reclaim the support tops I'd missed very easily afterwards.

WonderWoop · 14/04/2023 19:47

@MudandParsnips when this happens to me a separate payslip is created. So eg in March two payslips, one for shares vested but not sold.