High Income Child Benefit Charge

[PurplePetalPip]

Hi, just wondering if anyone can clarify something for me.

I had a pay rise in July so I now earn over £50k which makes me subject to the high income child benefit charge.

However, my salary prior to this was low enough so that if you calculate my salary over the full tax year it will be under £50k.

Looking at the HMRC website, I presumably now need to either opt out of payments or pay the tax charge at the end of the tax year. However I am assuming if I was to complete a self assessment tax return at the end of the tax year (which I don't normally do as I'm employed so all goes through payroll), I would declare my income for the tax year as under £50k which would result in no charge.

So my question is, do I actually need to do anything for this tax year? Is it ok that my salary for the tax year will be under £50k so I can continue receiving payments? Or do they go by your monthly income?

Just to clarify these figures are after salary sacrifice. In theory I could increase my sacrifice to take me back under £50k on a monthly basis but as things are a bit tight at the moment (yes I know I'm fortunate to earn what I do but individual circumstances which I won't go in to), I'm trying to maximise my take home income right now.

It’s the total salary during the complete tax year (the figure on your P60) and if you have an employer pension, net of your contributions.
My pension is high so I actually earn a fair bit over £50k but don’t pay anything back for it yet as the adjusted pay was £49 under £50k.

Next pay rise will take it over but only a bit and will still be worth claiming it.

Brilliant, thank you. So I should be ok this tax year as my final salary after salary sacrifice for the full year will be under £50k.

Next tax year I will have to review and will probably increase my salary sacrifice as it will be worth it.

It is based on your actual income for that tax year. Whether a mid year pay rise will bring you up to repayment threshold overall depends on how much above/below your salary was and any deductions like pension contribution. Bear in mind a tax return for the current tax year is not due until January 2025. If you will definitely repay in full (ie over 60k) you could opt out from April 2024 and only have to deal with it for one year.

Don't stop payments if you are only a fraction over 50k.
It tapers between 50k and 60k, and only stops payment at 60k.

It is total year, taxable, earnings that are considered.

More and more people are reaching the higher income bracket and are getting caught out with the repayment and fines. This income limit has not been changed for 10 years, if it is was in line with inflation it should be around 65k. This petition is worth signing! HICB tax charge petition

Mine is just over and had to put a tax return in for 2022/23. I was rather confused by all the questions and no idea if I’ve done it right.

I opted out as the stress of not getting right and being hit with a fine was more than the money. Means I have to work more though but I just found the form so confusing. It told me I owed £850 when my actual pay after pension contributions was only £758 over the £50k 🤷‍♀️😭

You should only be charged 1% of the child benefit you have received for every £100 over the 50k limit. So around 7% for you which is less than £80 ish if you are claiming for one child.

This year I went over the threshold so had to do my first self assessment tax return. Just be careful as not all Sal sac are deductible when you do your return, for example a car through a sal sac scheme needs to be taken into account in the calcs.

I was gutted to lose my child benefit as my hubby isn’t a big earner so looked at getting a sal sac car to offset the loss of CB but when I got tax advice it’s not taken into account.

The self assessment is a pain tho as if you have shares etc and get dividends then that’s classed as income etc. I’ve just cancelled my CB now as it’s wiped out with the tax so not worth claiming.

There should be separate petitions for making the earnings limit higher and for making it by household income. I would happily sign the former by the second request is a terrible idea. Women fought for years for the right to be taxed as individuals rather than as an adjunct to their partner. It would roll back womens rights and endanger women who are trying to escape an abusive relationship, for the benefit of a small number of relatively well-off families.

For OP - don't worry about it for now. The small amount you will have to repay in Jan 2025 will be tiny. Don"t opt out altogether until you are earning over £60k. From April 2024, keep receiving it but put a proportion (ie what fraction of the way you are between £50k and £60k) into savings ready to pay back in Jan 2026

You can also pay the charge through an adjustment to your tax code rather than a lump sum. Think you need to file a bit earlier if you want to do this.

Most of my colleagues use the car salary sacrifice for exactly this reason, all electric so low benefit in kind which I think is significant.

Sorry to piggyback on this but am I right in thinking I don’t have to do a self-assessment if I’m sure my pension contributions bring me in under 50k? Or should I do one so that it proves I am under threshold?

That’s what I thought but I was really confused by the form and though I put my pension in the working out it did said that.

I’m intelligent person normally, mind you I’m menopausal so that’s not helping 😂😂

Sorry my reply was to a previous poster but doesn’t look like the reply thing worked.

may be of interest to those who are affected by just reaching the threshold. It really should be assessed by household income, very unfair that you can get the full amount on x2 salaries of 49k but loose it gradually with one wage of over 50k.

https://petition.parliament.uk/petitions/639443