High Benefit Income Charge

[ACD2023]

Hey,

Last week (3rd November 23) we received a letter from HMRC saying that my partner has gone over the threshold for the Family Allowance/Child Benefit for year 2022-2023.

It says we need to apply for self assessment, which we did a few days later but now I see it says all self assessments should be done before 5th October. Does this mean a fine is guaranteed?

We haven't heard back since applying, so still have the self assessment form to complete I am assuming as never done this before so have no idea how it all works!

My DH earnt £59k in the last financial year, although he does pay pensions each month. Each year will vary as it is all down to his overtime. Does this mean we have to now apply every single year, or only when we go over the threshold?

Is it 1% for every £100 that needs to be repaid? I never even knew about this charge until we got the letter.

Does anyone know how it can be repaid, do they offer monthly repayments?

You pay tax via self assessment for previous year online through a self assessment tax account. Its very easy to complete usually.

When i've done it in the past it was always end of Jan was the deadline for online, paper forms was earlier i think.

With a salary of £59k you'll be paying back the majority of the child benefit, if you have 1 child i think you would need to repay around £1100, depending on how much pension contributions are etc

You can either carry on receiving the money and paying it back each year, or you can opt out of receiving it. You don't need to keep applying for it

January 31st 2024 is online SA deadline. Your dh will need to register and create an account. You may find after pension deductions etc there is little owed. Once he has registered he will need to submit a SA each year-unless HMRC tell you otherwise. You could opt out of the cb payments but you may still be eligible for some.

Deadline should be January 31st to complete self assessment tax return and pay any money due. From memory it takes some time to register for self assessment and get the government gateway account set up and receive the UTR (unique taxpayer reference) number that you will need to complete self assessment online. It might be that the deadline for paper tax returns is earlier as well?

I have to fill out an annual self assessment for the same reason, as my bonus tips me over into having to pay some/all back, but because it's variable I never know quite how much by.

One word of warning if it's likely to be an annual event and you want to pay the tax during the year through your tax code rather than 10 months later when the tax return is due - check that HMRC are estimating your husband's taxable income realistically on the account. My tax code is generated at the start of the year via PAYE but they don't take the bonus into account so I need to manually change the estimate to include it. I forgot to change my tax code until October this year so now I'm having to take the deduction over six months rather than 12 (ouch!). I prefer that to paying when I do the tax return as I'm a bit rubbish at putting the money aside to pay later on.

On 59k I’d cancel it and you will get hardly any. I had the same issue when I got a promotion and started earning 61k. The year prior I did a lot of overtime so earned around 55k and it was worth claiming it and doing the SA. But at nearly 60k it’s not worth the hassle in my opinion. Unless you’re a SAHM then apparently good to claim CB for pension contributions

If your are a sahm or have minimal earnings then you can register with hmrc for child benefit but not take the cash so that you still get the pension credits for parents of a child under 12.

The 5 October is when you need to register for self assessment by, IIRC, not to have it filled in by.

The first year we paid some back DP had earnt about 50 but the private health care benefit took him over and we hadn't realised this so we were late.

He rang them and apologised and paid it in instalments of £100. I can't remember exactly but it was fine.

The next couple of years he did the SA and paid it, then when he owed it all back he did it as a tax code change (3 kids so well over 2k) and I cancelled the CB.

If he earns £59k before pension contributions, you'll still keep quite a bit of CB, eg if he pays £300 pm, that's £3600 per year, so you'll keep nearly half the CB and the high earner can normally pay back the amount owed by a tax code adjustment.

I'd not expect to be fined now that it's all been sorted and from now on, he just needs to do a tax return each year, which takes no time at all if it's just for the CB tax charge, so you could look at it as a few minutes admin each year that earns you £1000 so well worth doing.

Why not really up the pension contributions? Any charitable giving?

Like if you pay 20% of your salary into pension you will be ok? If it's done through salary sacrifice it wont be too painful. I would look into it. I think you might still be better off doing this.

Thank you all, very helpful information. I applied for Self Assessment and didn't hear anything for about 4 weeks, so applied again online and still haven't heard anything. Does anyone know how long it takes to hear back for the next stage?

Should not take that long but the SA is for your dp not you.