High income child benefit charge...oh ****

[Jez]

^Indeed!

By definition, payback of a benefit due to a test of means, is absolutely a form of means testing, albeit retrospectively.

Why it is done retrospectively I am not quite sure...

If you wish to argue that retrospectively recalling a benefit as a result of a test of means (a tax return) is not means testing...then frankly go into politics as I am sure a politician would try to argue the same

 

[Lokai]

We got caught out last year, obviously head in the clouds for us both, had to pay back the full amount received. Stressed the wife out to be honest having to do a tax return for first time etc All came from too much over time (nhs, stretched, no staff.....).

 

[lookitsjonno]

You have my sympathy. Had to pay back 3yrs worth earlier this year, like others bonus pushed me over. What frustrates me is the fact it took 3 years for them to tell me after running up a big bill. They could have at least sent a letter once they realised I was getting close to the threshold. You can ring them up and set up a payment plan, and if you file your return before mid-December sometime you can have it deducted from next year's PAYE (that's what I'm going to do).

Even more frustrating is the fact I am a single earner, so as a household I calculated we pay ~£7k more tax a year than if our earnings were spit between us.

 

[Bobmunkhouse]

Oh no I got one of those letters...I guess I better call them... anyone just ignoring them?

 

[aMb]

Might be worth looking at ESC A19 https://www.gov.uk/hmrc-did-not-act

 

[Pudney]

Oh no I got one of those letters...I guess I better call them... anyone just ignoring them?

Of all the people and institutions in this world you can ignore HMRC definitely wouldn't be one of them.

 

[Threepwood]

^Indeed!

By definition, payback of a benefit due to a test of means, is absolutely a form of means testing, albeit retrospectively.

Why it is done retrospectively I am not quite sure...

If you wish to argue that retrospectively recalling a benefit as a result of a test of means (a tax return) is not means testing...then frankly go into politics as I am sure a politician would try to argue the same

Honestly, the shoe is on the other foot, because its not means tested. You apply, prove you have the child then they give it to you without any form of means testing. It is literally none means tested.

Sounds like you just defined means testing...

The sky is not blue but it does sit in the vicinity of 430–770 Thz band range.

Means tested would mean that they would decide if you could have it by testing your means, which they dont. If they take some of it away again, it doesn't change the fact they give it to you without testing your means.

As for the sky... pfft, is blue all you can come up with? ive seen red, black, blue, yellow, white, polka dot.... etc.

 

[Ugley_Matt]

Hmm I’ve not had the letter but last tax year my side gig pushed me over the 50k so I guess I should get in touch with them

 

[Participant]

Thanks all. Sounds like I'm basically screwed unless I fancy paying £30k into my wife's pension fund .

Might be worth looking at ESC A19 https://www.gov.uk/hmrc-did-not-act

Thanks, I'll check that out but it sounds like that might only apply to PAYE mistakes, rather than self assessment.

Hmm I’ve not had the letter but last tax year my side gig pushed me over the 50k so I guess I should get in touch with them

Note that you can deduct pension contributions. The £50k is based on adjusted net income / total taxable income.

 

[dowie]

Means tested would mean that they would decide if you could have it by testing your means, which they dont. If they take some of it away again, it doesn't change the fact they give it to you without testing your means.

No it just means it is assessed based on your means... which it is. You're trying to argue it isn't means tested based on a technicality related to how this means testing is implemented - that's simply because they wanted to keep it simple when introducing it - the intent and the overall effect is the same, the intent was to eliminate child benefit for high earners and to taper it off... that is means testing it. That the means testing was carried out in a simple/crude way via the income tax system doesn't negate that the benefit is means tested.

You can go back to the people who came up with it in the first place to see this, the intent is pretty clear - namely they've introduced means testing and they implemented it in this way because it was the simplest way of doing it.

https://www.theguardian.com/politics/2010/oct/04/george-osborne-under-fire-welfare

Osborne said this was because the government was trying to keep the system "as simple as possible".

He said he hoped higher-rate taxpayers would stop claiming child benefit but, if they did not, the same amount would be deducted from them through the tax system.

Osborne's colleague, Iain Duncan Smith, the work and pensions secretary, admitted when pressed that it was unfair for a single parent to earn just over the threshold and receive no child benefit, while two parents each earning just below the threshold would keep it.

"I know, and there is no way of doing it in a more spread way than this. Of course, when universal credit comes in we will be able to taper this in a much, much more progressive way," the former Tory leader said.

Then further down from the IFS:

Mike Brewer and James Browne of the Institute of Fiscal Studies [...]
He added: "The government might argue that using the income tax system to means test child benefit is cheaper for it to administer than devising a brand-new means-test, and can be done more quickly.

"But there is already a system of means-testing support for families with children through the tax credit system. The government could have straightforwardly reduced spending on child benefit by combining it with the child tax credit in some way."

 

[dowie]

Why it is done retrospectively I am not quite sure...

As per the quotes above - it was done like this because the government, at the time, saw it as the simplest way to implement the means testing of child benefit - by paying up front then means testing via the income tax system.

 

[Martynt74]

It seems they're just done an exercise as i was chatting to a mate about this this morning.

She spoke to them and seems at the moment they're only interested in 15/16 and 16/17 and aren't chasing up 17/18 and 18/19 at the moment.

He's a bit stuck because his basic salary is under the £50k threshold and eligible to claim the benefit, but then depending on overtime and stuff he can easily be over £60k.

I've told him to just claim it and stick it in a separate account until he knows where his annual salary lies but he just thinks it's easier to do less overtime as the with the hit it brings his overtime hourly rate to about £10ph which isn't worth it for him.

 

[Bobmunkhouse]

I spoke to them and they can't tell me how much I owe and no deadline yet...you have to try and work it out and tell them...all seems crazy no idea if you would ever be caught if you did not call! My letter was for 2017 to 2018

 

[ttaskmaster]

What is child benefit?
Child benefit is a non-means-tested benefit payable for each child. You can get child benefit no matter what your income, but see below for the high income child benefit charge if your income is high.

As at April 2019
https://www.litrg.org.uk/tax-guides/tax-credits-and-benefits/child-benefit

The child benefit tax is means tested, though.
So basically anyone gets the benefit, but then they test how much you earned and then decide if you've gone over the threshold for needing to pay some back. It's done retrospectively, because some people (self-employed) have no idea how much they are going to earn in advance.
https://www.theguardian.com/money/2013/jan/03/child-benefit-changes-what-they-mean

Seems straightforward enough...

 

[Jez]

ttaskmaster - unfortunately you are being that guy

As per the quotes above - it was done like this because the government, at the time, saw it as the simplest way to implement the means testing of child benefit - by paying up front then means testing via the income tax system.

Makes sense. To be fair, it also allows people with variable income to easily dip in and out of it. It is a straightforward way of doing it i suppose

 

[dl8860]

This is just one of those things that I wish wasn't affected by how much you earn. Is income tax and NI not supposed to take care of earnings discrepancies?

 

[ttaskmaster]

ttaskmaster - unfortunately you are being that guy

Can you be more specific? There are so many different kinds of that guy/gal/person/non-binary-gendered-individual on the internet these days...

Being possibly in a position where such payments might become relevant to me, I just got slightly curious and went to look for myself. My point stands - They don't means test your entitlement, but if you later go over the earning limit they might check to see if you're getting the benefit, at which point it becomes taxable... which accounts for why some people don't get taxed on it for several years. I believe there are numerous other such things that work the same way, which is why some famous musicians get hit with massive tax bills years after their big earning days have ended.

TBH, if I was earning even close to £50k, I wouldn't even bother claiming it in the first place!

 

[Pudney]

but I wasn't aware of the charge and assumed all of this type of thing would flow through PAYE anyway.

I don't understand why it's all done through self assessment rather than just a reduced allowance.

I've realised this hasn't been answered yet. The answer is quite simple actually, the HICBC is a charge for the highest earner rather than anyone earning above £50k. It also takes into account income other than employment income. So adjustments are not made through PAYE as HMRC generally isn't aware in real time of who is receiving the child benefit, who is a "partner" of someone who is receiving the child benefit, and who has the highest income of the two partners (particularly who has the highest income at the end of the tax year, particularly a problem if one partner receives large bonuses late on in the tax year).

 

[SaintJimmy]

I've just entered this bracket for the tax year 18/19. Fortunately I saw an article on a news site and became aware of this, otherwise I would have been caught out too.

Being that I neither have a child or claim child benefit not best pleased at having to do this especially as the threshold hasn't risen with inflation since it was introduced in 2013.

Anyway have added to pension to keep myself below 50k now.

 

[Jez]

Being that I neither have a child or claim child benefit

? This in no way affects you then