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Original poster

Please help me understand child benefit high earners charge

34 replies

Tomatojuiceandvodka · 21/11/2023 20:59

Hi, I’m hoping someone can help me because I just can’t get my head around this.

i know that once one parent is earning over 50k, you lose some of your child benefit. However, I believe that that 50k has to be your adjusted net income. I just can’t get my head around what adjusted net income actually means.

my salary has just gone up to 54800. Prior to that it was 50100 but 23-24 is the first tax year my gross pay has been over 50000 (I’m a teacher and so I get a pay rise in September so prior to sept 2022 I was well under 50k meaning my total for 2022-23 was under 50k even though I was on 50100 from sept 2022-aug 2023 iyswim).

i think this means that at the end of this financial year I need to fill in a self assessment tax return and pay back some of the child benefit I’m receiving. However some people are telling me that the 50k cut off is based on your pay after pension deductions. I pay about 10.5% pension, so after pension I earn just below 50k.

do I or don’t I need to pay any back? If so what do I fill in?for context I’m divorced from kids dad. I’m the resident parent. My dp earns well under 50k

thank you for anyone who can clarify

OP posts:
Werewolfnotswearwolf · 21/11/2023 21:00

I am in your exact situation and need all the advice you do! No idea how to work it out.

Original poster
Tomatojuiceandvodka · 21/11/2023 21:02

Werewolfnotswearwolf · 21/11/2023 21:00

I am in your exact situation and need all the advice you do! No idea how to work it out.

Confusing isn’t it. I don’t consider myself a stupid person but the website is not helping me. I just need it to say “if you earn 50k pay us some back” or “take your pension off your salary and if that’s over 50k pay us some back” then I’d understand.

also I’m still paying a student loan. Does that affect my “adjusted net income”

OP posts:
Sawaranga · 21/11/2023 21:05

Work out:

  1. Gross earnings including any bonuses which I assume don't apply, plus any self employment income/any other taxable income
  1. Pension contributions

If you take off your pension contributions from your gross income and that comes to less than £50k you are okay for the high income child benefit charge. If say in 2023/24 this is £49500, and in 2024/25 you go up to £50,500, you could put another £501 into your pension to avoid the high income child benefit charge or you could just do a tax return. Between 50k and 60k there is a clawback.

Sawaranga · 21/11/2023 21:07

Student loan deductions are not included.

Have you used the calculator on gov.uk to work out your adjusted net income?

Original poster
Tomatojuiceandvodka · 21/11/2023 21:07

Thank you!

So my adjusted net income for this year falls just below 50 because 54800-10.5% is less than 50.

do I need to fill in a form to tell hmrc that although my gross is over 50 my adjusted net is less? Or will they just know that because pension is taken direct from salary?

OP posts:
Original poster
Tomatojuiceandvodka · 21/11/2023 21:10

Sawaranga · 21/11/2023 21:07

Student loan deductions are not included.

Have you used the calculator on gov.uk to work out your adjusted net income?

I tried but I’m honestly too stupid I think. I just didn’t understand it. It’s the part about take off pension contributions made gross. Do I make my pension contributions gross?

I’m sorry I’m honestly not usually a clueless person

OP posts:
EasterIssland · 21/11/2023 21:10

The 5x mark is post the deductions of the pension

id suggest going through this with your numbers and Itll tell you how much you owe

Sawaranga · 21/11/2023 21:11

No, you don't need to tell them. But you do need to watch out for future tax years to make sure you register for self assessment if you do go over £50k, because they won't necessarily write to you.

It is an absolute ball ache and a stupidly set up tax. The UK tax system is based on individual taxation, but the benefits system is based on household income so it just causes so much shit and is so poorly drafted... I could go on 😂

If you have Twitter Dan Neidle did a good thread on it the other day, there have been quite a few court cases regarding it.

EasterIssland · 21/11/2023 21:12

The website is easy
salary 54k
how much money have you put on your pension : this should be in your payslip

also , I’d say if you get your p60 at the end of the year is the amount is higher than 51 I think it’s then you’ve to do the return if not then you don’t

Sawaranga · 21/11/2023 21:13

You are not stupid, it's a nightmare.

Was it this bit you were unsure about? pension contributions not paid from your salary (the amount you actually paid, not the grossed-up amount)

Those are for folk with private pensions so don't think you'd have to worry about that part.

Original poster
Tomatojuiceandvodka · 21/11/2023 21:16

Sawaranga · 21/11/2023 21:13

You are not stupid, it's a nightmare.

Was it this bit you were unsure about? pension contributions not paid from your salary (the amount you actually paid, not the grossed-up amount)

Those are for folk with private pensions so don't think you'd have to worry about that part.

Yes the term “grossed up” made no sense to me.

i just don’t want to do the wrong thing and end up in trouble! Going to see if i can dig out my last p60

OP posts:
Riverstep · 21/11/2023 21:17

If you’re a teacher, are your pension contributions not deducted from your pay prior to tax/ ni? If so you just need to use the figure from your p60 - the taxable income when completing the self assessment. Other income from other sources eg rental income have a separate section on the self assessment.

Sawaranga · 21/11/2023 21:20

https://community.hmrc.gov.uk/customerforums/sa/b0cba31a-e596-eb11-89ee-00155d9c739f

This thread is quite helpful, eventually!!

Manif3st101 · 21/11/2023 21:22

It sounds like you are under the threshold, I had the same issue a few years ago so I put some money in a private pension which not only kept me below the 40% tax threshold but also meant I kept the child benefit too. If you are a teacher you can probably do an AVC through your work pension provider.

Original poster
Tomatojuiceandvodka · 21/11/2023 21:22

Riverstep · 21/11/2023 21:17

If you’re a teacher, are your pension contributions not deducted from your pay prior to tax/ ni? If so you just need to use the figure from your p60 - the taxable income when completing the self assessment. Other income from other sources eg rental income have a separate section on the self assessment.

Yes they are taken out and then tax is deducted. Last years p60 has 41kish in the starred box my gross salary was 47ish for some of the year and 50109 for the rest of the tax year. So I’m presuming that starred figure is after pension

OP posts:
Sawaranga · 21/11/2023 21:22

If you do end up with your earnings being over £50k (but I'd just put the extra into your pension scheme) then you need to register by 5 October for Self assessment, to pay the tax in the following January.

Original poster
Tomatojuiceandvodka · 21/11/2023 21:23

Manif3st101 · 21/11/2023 21:22

It sounds like you are under the threshold, I had the same issue a few years ago so I put some money in a private pension which not only kept me below the 40% tax threshold but also meant I kept the child benefit too. If you are a teacher you can probably do an AVC through your work pension provider.

Thank you I think you’re right that I can do avc quite easily

OP posts:
Original poster
Tomatojuiceandvodka · 21/11/2023 21:24

Sawaranga · 21/11/2023 21:22

If you do end up with your earnings being over £50k (but I'd just put the extra into your pension scheme) then you need to register by 5 October for Self assessment, to pay the tax in the following January.

But that would be next October right?

thank you everyone for helping

OP posts:
Sawaranga · 21/11/2023 21:26

Yes, so say you are liable in 2023/24 tax year, would register by 5 October 2024 to file 31 January 2025

But hopefully you won't be!

Riverstep · 21/11/2023 21:33

With pension contributions of over 10% deducted pre tax/ ni , your taxable pay will probably be under 50k so you won’t have any child benefit to pay back and won’t need to complete a self assessment. So if you are talking about the tax year 2023-2024 , just wait for your p60 to arrive in May 2024 as this will have the figure on that you need. You will have until October 2024 to register for self assessment if you need too so plenty of time. I’m assuming there isn’t any other income.

KDAH · 19/01/2025 20:24

Hi, I know there are previous threads but I'm still unsure and I've been on HMRC so many times.
For HICBC my total salary before any deductions was £62863. Do I take away the tax free income in order to arrive at my taxable income (£50294.33)? And then do I take off my teacher pension too (10.2%)? Or do I take the teacher pension off the total salary before any deductions?
I'm so confused and worried about this. And I feel really thick!

LIZS · 19/01/2025 20:27

Pension is deducted, not tax allowance. Check your p60

KDAH · 19/01/2025 20:33

I have and there's no mention of pension on it. Unless it's phrased without using the word pension🤷‍♀️