Self Assessment Child Benefit Charge twice?

[orion1210]

Hi,

I'd be grateful if anybody with experience could take a look at this.

My partner and I claim child benefit and I have done self assessment for approx 10 years since I started to earn above the threshold(s). I understand HMRC changed the way we pay back child benefit a while back by estimating it for the coming tax year rather than recovering from the previous. This meant for the year it changed over you effectively pay for two years worth. That said, for the past few years I have noticed on my coding notices that there is the child benefit charge and also an underpayment for the previous year, I can't help but think I'm being charged back twice in the most recent years. I have spoken to HMRC and they advise everything is in order but I'm having a hard time understanding it. Below is a summary of the last few years coding notices...

Tax year 2015-2016 dated NOV15: less child benefit £1162, less underpayment restriction £3049, tax code 671L
Tax year 2016-2017 dated JAN16: less child benefit £4472, less underpayment restriction £1593, tax code 528L
Tax year 2016-2017 dated OCT16: less underpayment restriction £1593, tax code 973L (think I asked HMRC to continue with the old system rather than the new system that was applied above)
Tax year 2017-2018 dated JAN17: less underpayment restriction £3070, tax code 878L
Tax year 2018-2019 dated 12DEC18: less child benefit £4472, tax you owe earlier year £4123, less adjustment for estimated tax you owe this year £9541 tax code K559 X (defo not sure what happened here!)
Tax year 2018-2019 dated 30DEC18: less child benefit £4472, tax you owe earlier year £4123, tax code 393L X
Tax year 2019-2020 dated JAN19: less child benefit £4472, tax you owe earlier year £4468, tax code 423L
Tax year 2020-2021 dated DEC18: less child benefit £4550, tax you owe earlier year £3357, tax code 527L

I claim a small amount of flat rate and other job expenses so the figures might not quite add up for the really keen eyed. I do not have any other income other than my full time employment which has been with the same company for seven years without any breaks or tax changes. My tax code has always been swiftly updated by payroll when issued.

Look forward to hearing you thoughts on this, thanks.

[bd6759]

Your PAYRE tax code determines how much tax will be deducted from your pay. That is all that it does.

Your self assessment calculates how much tax you need pay, and deducts from that amount all the tax that was deducted under PAYE. You are asked to pay the difference (or you received a refund of the difference.)

It gets complicated where underpayments are not paid but included in your tax code for a later year. It can become difficult to follow. You need to look at the amount due each year. If you did not pay it, look for a later year where that amount will be included in your self assessment as an underpayment brought forward.

Better to simply tick the box telling HMRC that you do not want any underpayment included in your code, and pay what is due directly each January.

[orion1210]

Thanks for you reply, I wish I’d done that now!

I still don’t understand why I’m still seeing underpayments in the years after they started taking off the following years child benefit with my tax code. I’d expect to only see that only in the first year they accounted for child benefit directly in my tax code. In my mind the following year shouldn’t have an underpayment shown.

[robbob]

I still don’t understand why I’m still seeing underpayments in the years after they started taking off the following years child benefit with my tax code. I’d expect to only see that only in the first year they accounted for child benefit directly in my tax code. In my mind the following year shouldn’t have an underpayment shown.

For some peope paye codes are only ever an estimate for example if your income increase £1000 a year starting at 50k and ending at 60k 10 years later every year you will have had a higher child benefit tax charge each year - if the tax code was based on the previous years child benefit bill when you had lower income you would end up with a year end bill and that would potentially be collected in future years - similar could happen if you add more kids as you go if your exepnses claims are reducing year on year.


Unless you do full calculations and write down exactly how and when unpaid tax is being settled you will probbaly end up clueless - there is always a the danger that something is being enterd wrong on your tax returns that could be causing an issue. It would seem unlucky to end up with a year end liability every year for 5 years - however looking at 16/17 and 17/18 it looks like no child benefit adjustment may have been included in your code - therefore those amounts would have been caught up in 18/19 and 19/20 - nothing is partiularly clear though!

[orion1210]

Thanks Robbob, nothing changed in my circumstances and I was 60k+ for at least the last seven years.

Do you think it would be worthwhile seeking professional help on this; if so do you have any recommendations?

Cheers