Child Benefit eligibility and High Income Tax Charge

[Dante32]

Dear All,

I have searched this excellent forum, which I truly wish I had discovered beforehand and have a set of questions which I have not seen fully answered anywhere else. I hope that I have not made any mistakes in my actions and would appreciate some firm advice on where I stand and what to do.

I am a British citizen with a British citizen child and Russian wife.

We moved to UK in July 2013 and are due to apply for the first FLR (M) for my wife in March 2016.

I was employed in a high salary role until September 2014 when I was made redundant receiving a pay off, so did not need to worry about the 2014/15 tax year income, but when the 2015/16 tax year commenced and I was still jobless, I applied for child benefit in my name (only one parent can be named anyway) but had the funds paid to a joint account (my name and my wife's who has no recourse to public funds stamped on her visa). In my mind CB is allowable for a British citizen applying for a British child even if the spouse is under immigration control and this despite any savings (we have 60k ring-fenced should we ever need to go down the savings route).

I started receiving the CB as of June 2015.

Subsequently, I obtained a new high salary job in September 2015 with a probationary period of 3 months. In light of the probation, I did not immediately cancel CB, but have only cancelled it in January 2016 meaning a total pay out of 8 months' CB.

The irritation is that having claimed CB, due to the high income tax charge, I now need to return the totality of the monies received as come the end of the 2015/16 tax year, my earnings will be in excess of 60k (ie no CB eligibility).

I have thus created a pointless headache and am very worried about the potential fallout for my wife's visa renewal.

Ultimately the questions are simple.

1. Was I right to apply in the first place in my name when I was unemployed (as a British citizen despite having a wife under immigration control)?
2. Was I right to have the funds transferred to a joint account (one of the joint names being my wife who is under immigration control)?
3. Should I have cancelled the CB immediately upon getting the new high paid job?
4. In light of the fact that I have cancelled now, am I best advised to leave the repayment of the monies to the tax assessment period, or should I ask HMRC whether it is possible to repay the totality of the funds immediately and before applying for the visa extension?
5. Is there any risk that this will jeopardise the renewal of my wife's FLR (M)?
6. How is it best to explain this to the HO?

I look forward to reading your sound advice and comments.

Thanks

[CR001]

1. Unlikely if you had that level of savings. Did you declare the £60k savings in the application?

2. Joint account for CB payments is fine.

3. Yes

4. If you are able to repay all the money then pay it. Alternatively, if HMRC is prepared to accept a payment plan, that is fine but you must get a letter to confirm this etc.

5. Possible

6. No need to if you are able to repay it in full. 8 months @ £20-20pw is not really that much to pay back if you have substantial savings and a high salary.

[Dante32]

Thanks for your quick reply.

1. Unlikely if you had that level of savings. Did you declare the £60k savings in the application?

No, I did not declare the savings as according to the CB guidlines 'Child Benefit is an allowance for people bringing up a child or children. Income under £50,000 per person or savings do not affect it, an amount is paid for each child. For example, if you are bringing up three children the total amount you get will be made up of three allowances."

2. Joint account for CB payments is fine.

- ok good.

3. Yes

- ok not much I can do about this, but at least it is cancelled now.

4. If you are able to repay all the money then pay it. Alternatively, if HMRC is prepared to accept a payment plan, that is fine but you must get a letter to confirm this etc.

- ok, I will phone them tomorrow.

5. Possible

- why exactly? If I pay the money back immediately, does it alleviate your concern?

6. No need to if you are able to repay it in full. 8 months @ £20-20pw is not really that much to pay back if you have substantial savings and a high salary.

- but they will see the CHB amount coming into the account every month, so I will need to say something.

I am pretty worried about all this as you can imagine.

[CR001]

If you have paid it back and have a letter stating it has been paid back it is a non event.

When is the extension application due?

[Dante32]

If you have paid it back and have a letter stating it has been paid back it is a non event.

When is the extension application due?

Thanks for your speedy reply again.

The visa renewal will take place middle of march. I have just checked the front of the CB application form and it specifically says - 'you can claim Child benefit no matter how much you earn or have in savings.'

So, if I understand you correctly, if I pay back the monies immediately and have a letter confirming that there is no exposure on the High income tax charge (due to a zero pay out balance), then there is no longer a risk to my wife's visa? I would also not have to write a letter explaining the situation when applying?

[Casa]

This link explains in simple terms how you can claim CB despite high earnings, but you will pay a higher level of tax.
https://www.moneyadviceservice.org.uk/e ... -from-2013

A self-assessment tax return must be submitted.

[Dante32]

This link explains in simple terms how you can claim CB despite high earnings, but you will pay a higher level of tax.
https://www.moneyadviceservice.org.uk/e ... -from-2013

A self-assessment tax return must be submitted.

Thanks Casa, the problem with this suggestion is that I already made a postal tax return in october. In light of what your colleague is saying above, my sense is that the sooner I pay the monies back, the better. The feeling I am getting is that having a letter saying 'you received ca 600GBP during the tax year 2015/16 and you have paid back said ca 600GBP' will remove any negative implications for my wife's visa.. Agree?

[Casa]

In my opinion you should speak to HMRC to understand the position regarding tax deductions before repaying the CB.

[Dante32]

In my opinion you should speak to HMRC to understand the position regarding tax deductions before repaying the CB.

Why exactly Casa? Is it because you think that there might be a danger of paying twice? To be honest, in the scheme of things, that would be a small price to pay to clear this situation up and make sure that the HO are happy that no benefits have been claimed.

[Casa]

Yes, there may be a double payment. But of course do what you feel comfortable with.

[Dante32]

Yes, there may be a double payment. But of course do what you feel comfortable with.

Thanks Casa. As I say, a small price to pay to clear this up. Your help and that of your colleage has been invaluable.

What I have understood is that yes, I could apply for CB as a British citizen and a joint bank account is no issue (neither are the savings). It is good that I have stopped receiving CB now and repaying the monies immediately should make this a 'non-event' to quote your colleague. I presume therefore that my wife's visa is thus 'safe' and no-one sees any issues once the account is cleared?

[Casa]

I see no issues.

[CR001]

No issue at all. For example, if you were on a low income as a British citizen, you would be permitted to claim CB without any effect on your spouse's visa extension as she is not the one claiming.

My advice has been on the basis that I personally, never mess with HMRC or any taxman, and would pay it back to keep the peace.

[Dante32]

No issue at all. For example, if you were on a low income as a British citizen, you would be permitted to claim CB without any effect on your spouse's visa extension as she is not the one claiming.

My advice has been on the basis that I personally, never mess with HMRC or any taxman, and would pay it back to keep the peace.

agreed. Key learning, I shouldn't have applied in the first place and will refund the whole lot this week.

I have gone from depression to happiness in an hour. Thanks to you both.

[Dante32]

Just one final thought. There is no danger that they might say 'no, you cannot repay now''?

Presumably, you guys have experience of this and if I pick up the phone tomorrow to CB and say 'I want to pay' they will be able to let me....

Please confirm that this will be possible with the CB helpline.

Thanks.

[CR001]

It should be possible yes, other members of the forum have repaid CB and not reported any issues.

[Casa]

I think that CR001 will agree that they'll only be too ready to take your money.

[CR001]

I think that CR001 will agree that they'll only be too ready to take your money.

Of course, it is Mr Taxman

[Dante32]

Good to know. I'll update you all after the call.
Thanks for the great advice.

[CR001]

You are welcome. Post again if you have any further queries.

[Dante32]

Afternoon everyone.

I thought I would update you as to the outcome of my discussion with the Child Benefit hotline.

Apparently all British Citizens can apply for Child Benefit (presuming they have children) regardless of savings or income.

You do not have to cancel Child Benefit the minute you get a high income job, despite the subsequent impact of going over the 60k GBP threshold at the end of the tax year.

The claim should be in the name of the British Citizen and in any case, CB can only be claimed by one parent. The Child Benefit office seem uninterested in a spouse's immigration status. It is the claimant's status that matters.

I neglected to ask if payment into a joint account would be an issue as all other CB documentation is in my name only.

Child benefit is easy enough to stop, however when asked, I was advised that I could not repay the Child Benefit payments paid out before without going through the self-assessment process.

In light of this, it would appear that I have not committed a faux pas per se, as I have claimed child benefit for 8 months in my name and for the benefit of my daughter, a british citizen and not my wife. That seems to be the key thing that the claim was not on her behalf (the spouse under immigration control). Even if payment is made to a joint account, this remains true. Am I understanding this correctly?

I was advised, that if I really wanted to pay the money back early, I would need to talk directly to another HMRC department, namely the aforementioned self-assessment. Is this actually going to work and will they let me pay over the phone?

So here is the big question. It appears that I have not done anything wrong according the the rather convoluted immigration rules, so should I really try to push for repayment now (before we submit the FLR (M)) or let it go till my next tax return? The reason I ask is that by endeavouring to repay early, I might be seen to be expressing doubt that I made a mistake when submitting the application.

Look forward to reading your thoughts guys.

Thanks.

[Dante32]

Any thoughts guys?

[CR001]

You should be fine if you are entitled to claim.

Get whatever you are told by HMRC in writing.

[Dante32]

Thanks for the feedback and sound advice. I am calling them again tomorrow to get another letter.

One question. When filling in the ch2 form it also asks for details about your partner. At the time I did not think twice about it and filled in my wife's details. This cannot be considered as a joint application can it? One does not get the feeling you could leave that section blank. But unclear on this point now.

Thoughts ? Thanks.

[CR001]

No, it will not be considered as a joint application. You do however have to provide your spouse details as you have to complete the form truthfully and any omission could be viewed as deception or with holding a material fact.