A new client has been claiming Child Benefit and has a taxable income of £60451 for 2017-18
When asked if her partner earns more than her she said that in the tax year she had lived with 2 different men. At the beginning of the year for 5 months she was at the the tail end of a relationship, which then ceased. 2 months later a new "partner" was installed and still lives with her. (neither are the father of the children)
Who is liable for the CB higher tax charge? I quote below the authority about definition of a partnership I've found which doesn't help. Can any of you??
"5) Condition D is that the persons are two men, or two women, who are not civil partners of each other but are living together as if they were civil partners"
Replies (12)
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From https://www.gov.uk/child-benefit-tax-charge/your-circumstances-change
"A partner moves in or out
Your situation may change if your income is more than £50,000 and you move in or split up with someone who’s getting Child Benefit.
You’ll have to pay the tax charge if your income is more than £50,000 and higher than your new partner’s income. Your partner pays it if their income is higher.
The tax charge applies from the date you move in together to either the date you permanently separate or the Child Benefit stops - for example because the child is too old to qualify for it."
This seems to at least imply she would have to work out the benefit paid for the number of weeks she was living with each of them, as well as the period she was living alone, and then consider who was the higher earner and allocate the charge accordingly - with the result that 3 different people might have to pay part of it. Sounds a bit of a nonsense, but given the way the charge operates, it wouldn't surprise me one bit.
Can't find anything further just now I'm afraid but I'd be interested to know if you get a definitive answer!
First five months - higher earner of client and Partner A
Next two months - client
Last five months - higher earner of client and Partner B
Does she need to pro-rata her income as well?
Comprehensive White Box Note needed here ... hope she knows the men’s tax references.
Raises an interesting theory if there were multiple partners moving in & put over the year. What about multiple partners ‘co-habitating’?
Where there are two partners who both have adjusted net income of more than £50,000, the charge rests with the partner with the highest income. If both partners have the same income, the charge rests with the claimant to child benefit. (Finance Act 2012 HICBC explanatory note)
Raises the question of whether he should have paid ‘his’ CB tax if he wasn’t living with his wife.
Problem solved by pragmatism
Client will pay the Child benefit charge, which she thinks is fair because:-
Her latest partner is married and has already been hit with the higher charge for CB received by his wife
You couldn't make it up as someone said
Hmm - what your client thinks is "fair" has nothing to do with it.
If she is likely to earn more than £60k for the foreseeable future then she may want to cancel the benefit or she may end up with loads more short term relationships when her partners realise they have to pay back her benefits for her. Or go for a lower earner next time.