Advice needed re: High Income Child Benefit charge

[LoveableLou]

Hello,

I've received a letter from HMRC asking me to work out my net adjusted income to determine whether I need to pay back some of the child benefit I have been receiving.

I'm finding it tricky to work out my gross salary, let alone an adjusted net income as as I am a contractor, and my daily rate varies from contract to contract and there are short periods where I am between contracts. Is it best to work out an estimated income instead?

My understanding is that your net adjusted income is what's left after the usual deductions and then other reliefs such as gift aid and trading losses, the latter I assume is when you're self-employed.

Is there a straightforward way of working this out or would it be best to find a tax adviser who can do this?

Thanks.

Can you not just complete an online tax return? Presumably this is for 2022/3.

Hi, yes it's for 22-23. I'm not sure as this is the first time I've done contract work since leaving my permanent role in August 2022.

For most people it's really just your taxable income so you will need to know it for your SA anyway; revenue (for the tax year) less allowable expenses and pension contributions.

The only reason it can get a bit complicated is around pension contributions and whether they are made out of gross or net pay.

Did you do any contract work in the TY 22-23 (after your employment ended)?

Thank you. I work via an umbrella company so my understanding is that I don't need to submit a personal tax return.

Re: pension contributions, it's not clear on my payslip how these are deducted so I'll have to check on that one.

My permanent role ended in August '22 and then I started a full-time contract in Sept '22 and have been doing that ever since (due to end March '24).

I'm paid through PAYE but still do an annual tax return as it's easier for the child benefit. Put all the figures in and it spits out what I owe.

ok - so you are effectively still employed then (hence to need to do a SA).

Do you have a p60 from last year? That would give you the info you need.

If not, ask your umbrella company what your taxable pay was in the period (the tax year 22-23) and add it to your taxable pay from your old employment (which you should be able to find on your last payslip from your previous employer).

If it's over 50k you will have to pay back some child benefit, if it's over 60k you will have to pay back all of it. It's on a taper between those two numbers.

If you earn over 50k you can still take the money but must pay tax on it.

As a general rule if you are earning over £60k the amount you'll pay back in tax wipes it out.

I ended up paying an accountant to complete the form for me as it was the one more thing that was about to tip me over the edge.

There is a fairly simple calculation they do, but navigating the hmrc systems can be a nightmare. It's more or less your take home after tax and pension deductions.

The umbrella will tell you

It‘s not after tax, there are instructions online how to work it out