Quote:
Originally Posted by Damien
That is a pretty absurd confluence of events you have concocted though.  In the event that someone is mistakenly taxed at 40%, and somehow doesn't notice he is being taxed at 40% for two years, and is claiming child benefit which is then stopped (surely that might rise a red flag in the reduced salary doesn't?) then you hypothetically suggest that benefit won't be paid? |
I have not "concocted" anything. He had income form other sources and assumed it was those that caused him to exceed the higher rate tax threshold. If UI remember correctly, the inland revenue had not accurately taken account of tax credits paid for share dividend. When the mistake was rectified it was discovered that his total income was below the threshold for higher rate tax.
Another example could be highlighted by paying pension contributions via a carry forward/carry back process. Which could have the effect of reducing ones marginal tax rates, over a seven year period. Which would mean that someone who is rich enough to maximise their pension contributions, for those years, will be given a bit of a boost by having their child benefit paid. Whereas someone who is not as wealthy, will have theirs cut.
---------- Post added at 12:33 ---------- Previous post was at 12:29 ----------
Quote:
Originally Posted by danielf
Actually, it's pretty certain the employee would notice being incorrectly taxed at 40% if his child benefits were stopped. Good diagnostic!
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Have you ever tried to get HMRC to rectify mistakes before? It isn't easy.