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High Income Child Benefit Charge

Is a Tax Return required?

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I'm sorry for asking what is probably a basic question.

I act for a female, married client. The income of both her and her husband is between £50,000 and £60,000 and, in previous years, her husband has declared the Child Benefit on his Tax Return (and paid the charge) as his income was the higher of the two. This year 2020/2021, however, my client has the higher income and I have declared the Child Benefit on her Tax Return.

Does her husband need to file a Tax Return for 2020/2021? The Tax Return HICBC section states that the section only needs to be completed if, among other conditions, "couples only - your income was higher than your partner's". This section, for the husband, would therefore be left blank. His only income is PAYE income so would a Tax return still be necessary?

The HMRC website says that he needs to complete a Tax Return, even though there will be no figures to declare. Have I got that right?

Many thanks.

Replies (28)

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By Tax Dragon
15th May 2021 11:54

Log into HMRC, select client (the husband), tell me what's on screen.

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Replying to Tax Dragon:
Universe
By SteveOH
15th May 2021 12:16

I don't act for the husband. It's just that his wife, my client, asked me if he needed to complete a Tax Return for 2020/2021.

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Replying to SteveOH:
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By Hugo Fair
15th May 2021 13:27

If you don't act for husband then, strictly speaking, you can't (or at least shouldn't) respond to questions regarding his tax affairs.
However there's no reason why you shouldn't suggest to your client that she's free to ask husband if he's received a "SA Notice to complete a tax return?" I'm sure he can look up the consequences of answering Yes or No to the question or, if it's not obvious to him, ask his accountant.

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By Not Anonymous
15th May 2021 11:54

If a notice to file (or return) has been issued then it should normally be completed.

You have the option to ask HMRC to withdraw the notice to file if HICBC was the only reason it was issued in the first place.

But I suspect that may take more time than simply filing the (completed) return itself.

It is the HICBC section that wouldn't need completing, the PAYE income would have to be declared as would any other taxable income.

I presume you realise it isn't the person with the "higher income" that is liable to the HICBC, is is adjusted net income which matters.

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RLI
By lionofludesch
15th May 2021 13:53

Afraid it boils down to "has he been asked for one?"

If no, you're grand, assuming he's paid the right tax.

If yes, you've a choice of (a) compleying it or (b) getting HMRC to agree to withdraw it.

Whichever you think is easier.

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Universe
By SteveOH
15th May 2021 14:13

Thanks, everyone. I've told her to tell her husband to fill one in anyway.

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By New To Accountancy
15th May 2021 14:16

Hi,
I asked HMRC this question last year and the obligation is for the higher earner to do the return even if the lower earner in the couple is the one who claims the benefit.
I asked this question on the webchat should there be any comebacks as the lower earner was not going to file a return as a result. I asked the lower earner to do the webchat also as they give their personal details and I'm hoping the question is logged if ever questioned plus I kept a copy of my general enquiries chat. I made it clear both were over £50k too.
I left it at that, suggested the client to continue claiming the benefit for NI number for the child and NI credits etc plus the tax payable was lower than the benefit.
Perhaps get the husband to ask this question via webchat and provide his personal details and remember to save a copy of the chat. If you look at HMRC forums, others have been confused about this, it's not you.

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Replying to New To Accountancy:
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By lionofludesch
15th May 2021 14:34

New To Accountancy wrote:

Perhaps get the husband to ask this question via webchat and provide his personal details and remember to save a copy of the chat. If you look at HMRC forums, others have been confused about this, it's not you.

I don't think it's confusing, really.

There's a wider question - can I unilaterally decide not to complete a return just because I don't think I owe any tax ?

Answer - No, even if you're right.

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Replying to lionofludesch:
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By New To Accountancy
15th May 2021 14:40

He didn't complete the return upon advice (webchat) from HMRC. It was more if HMRC then decided he should have.

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Replying to New To Accountancy:
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By lionofludesch
15th May 2021 15:02

New To Accountancy wrote:

He didn't complete the return upon advice (webchat) from HMRC. It was more if HMRC then decided he should have.

I wouldn't rely on a webchat conversation.

Ever.

For anything.

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Replying to lionofludesch:
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By New To Accountancy
15th May 2021 15:12

I can't rely on the phones either, at least there's proof of webchats, was my thinking.

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Replying to lionofludesch:
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By Paul Crowley
15th May 2021 18:58

+1
If issued deal with the tax return
File it or get a letter from HMRC saying tax return withdrawn

If HMRC agree over the phone, File a blank return.
Phone call to HMRC will often result in HMRC appearing to file on your behalf a paper return, which still leaves that return late per their software, if 'filed' after paper filing deadline.

Filing a blank return takes no time for the client himself or for agent on an existing client that filed prior year

I file probably 5 blank returns a year

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By Matrix
15th May 2021 14:33

Agree with all the above but I would quote a sundry fee for checking either his online account (as agent) or speaking to HMRC. The couple won’t be very happy if they find out the HICBC was coded into his tax code and he has already paid it. And you won’t know or be able to advise unless you have all the facts (and then can get the return cancelled or the code changed as required).

Edit - sorry this crossed with your update that you had told him to complete one anyway.

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By Paul Crowley
15th May 2021 19:11

I have never understood the reluctance to file an issued return
Most people can file some gift aid or valid expense in employment to tag on

The real issue every time I come across it is the need to declare interest and dividends on higher rate earners. By that I mean people who owe tax knowingly wanting to evade tax.

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Replying to Paul Crowley:
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By Matrix
16th May 2021 06:51

What am I missing? Wouldn’t they have to pay you to file the return whereas getting the return cancelled saves the fee surely?

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Replying to Matrix:
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By lionofludesch
16th May 2021 07:01

Matrix wrote:

What am I missing? Wouldn’t they have to pay you to file the return whereas getting the return cancelled saves the fee surely?

Depends how complex the return is. If they just have a P60, it's definitely quicker and cheaper to file the return.

Getting the return cancelled is no mean feat. Not to mention that HMRC might not agree and you're still stuck with filing the return anyway.

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Replying to lionofludesch:
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By Hugo Fair
16th May 2021 11:37

And with an income of between £50-60k, presumably the (non-)client values his time sufficiently not to be concerned about the minor fee (for which, based on previous years, he would already have budgeted)?

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By Mr_awol
17th May 2021 16:30

Surely there's a lot of unnecessary hand-wringing here.

OPs client submits TR, via OP. Husband isnt OPs client (presumably does own, may pay someone else).

OP just needs to tell their client that her husband will have to prepare a TR if he's been asked for one, but not if he hasnt as he is the lower earner and she will be paying the HICBC over as she should. If husband has any queries he can either:
1) Ask his own accountant (if he has one)
2) Submit his own simple TR (if he does own). Let's face it if he's been doing it before, he can do it now that it's even easier.
3) Engage the OP

Where do we get to charging a 'sundry fee' to look into a non-client's affairs?

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By Matrix
17th May 2021 16:39

I assume you mean my post. The sundry fee would be under 3).

The client could either pay me to file the tax return or to get the tax return withdrawn and check the tax code/higher rate tax relief on pension contributions etc. at the same time. The latter fee would be less, so a sundry fee.

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Replying to Matrix:
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By Mr_awol
17th May 2021 17:17

You used the term, but I'm sure there were multiple references to a charge.

In any case id say it's unlikely to get to that point, by the time you've told the client what the position is and gone through the other options.

The husband does his own TR or has someone already, as such id assume they will continue whatever the status quo is.

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By Mr_awol
17th May 2021 16:32

As an aside, should it really still be H(igh)ICBC?

Would M(oderate)ICBC not be better? £50k isnt all that 'high' these days. I thought this was supposed to be a tax on the rich who don't need Child Benefit.

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Replying to Mr_awol:
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By lionofludesch
17th May 2021 17:08

Mr_awol wrote:

As an aside, should it really still be H(igh)ICBC?

Would M(oderate)ICBC not be better? £50k isnt all that 'high' these days. I thought this was supposed to be a tax on the rich who don't need Child Benefit.

There are many, many folk who would still consider £50000 a year a high income.

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Replying to lionofludesch:
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By Mr_awol
17th May 2021 17:28

Im not convinced. It's nice, yes. But high?

Part of it is my own moving of the goal posts - when i was training, Higher Rate tax payers were 'rich'. Even when HICBC came in, Higher Rates of tax came in at the low forties, and £50k was quite a way above that, and the uk average was about £26k or £27k, around half the 'High' wage. With average wages in the low thirties now, £50k doesnt seem 'rich' and it's borderline whether it is really still 'high'.

I suppose i look at my clients with younger families, maybe dad earns £50-£60k, mum doesn't earn much as she's got childcare duties. Seems wrong that they have to pay it all back (to me at least)

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Replying to Mr_awol:
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By lionofludesch
17th May 2021 18:14

Mr_awol wrote:

Im not convinced. It's nice, yes. But high?

If you can't afford kids on £50000, you need to look at your priorities. Folk on this forum were quick to judge folk claiming SEISS. Child benefit handouts no problem apparently. The threshold should be a lot lower IMHO.

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Replying to Mr_awol:
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By Hugo Fair
17th May 2021 17:18

Guess it depends on which end of the telescope you're looking down?
£50k pa is still c. twice the average national salary, and considerably more than that outside the rarefied areas of the Finance sector and/or London.
Here in West London, the climbers have been busy inventing new labels to which to aspire ... High / Super / Ultra / and now Uber.
Whilst in many other areas (where my poorer relatives live!) the concept of someone earning £50k needing a state handout is presumed to be 'fake news'!

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Kitten
By Hazel Accounts
19th May 2021 11:09

As others have said if he received a notice (online account will show if HMRC asked) then he has to file.
Yes you could try and get them to cancel it but before you do consider next years position - who will be the higher earner in 2021/22? If it could be him again then I'd just suggest to him he files this year, presumable just P60 details so very little hassle really.

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By pmt1pff
19th May 2021 12:38

as an aside, one of the things you are asked when you try and claim that tax relief on the £6/wk (for homeworking) is whether you file a tax return or not. if you answered yes then you cant claim tax relief through the hmrc portal they set up for the purpose, you need to file a return. in which case it would be worth filing a return for the fella. for this tax year, if he can avoid filing one then he could claim the tax relief earlier in the year. this is obviously assuming he would be eligible i.e. worked at home for a bit due to the pandemic and wasnt already paid the £6. doesnt answer the question but its come up for me so thought it might be useful info.

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Replying to pmt1pff:
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By Hugo Fair
19th May 2021 13:43

Sorry but "if you answered yes then you cant claim tax relief through the hmrc portal they set up for the purpose, you need to file a return" is a circular argument ... in that if you answer Yes then that's because you are already due to file a tax return, so the answer isn't the cause of "you need to file a return".

Basically the online claim portal is ONLY for people not submitting a tax return (so that they can get the same benefit without the 'burden' of submitting a return) ... but does result in one difference (if HMRC systems are working) in that the portal should get you your new tax code much quicker than the SA route.

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