Child benefit and declaring the lump sum

[Polto]

When I left the RN last October I received a large gratuity, in excess of £50k. I also receive a pension and am currently employed for 16hrs a week earning minimum wage. All of which the taxman is aware of. Happy days.

I have two children under the age of 18 for whom my wife and I are in the process of receiving child benefit. The latest changes state that I must pay a tax on this benefit if, and I quote (all the items are to apply in order to pay the charge):
"You have an individual income of over £50,000 a year, and
either you or your partner received any Child benefit payments after 7 January 2013, and
your income for the tax year (in this case 2012-13) is higher than your partners. The partner with the higher income is liable to pay the charge if both partners have income over £50,000." Unquote.

Taking those three points one at a time:
a. Does that include my gratuity as it is/was a form of income albeit not taxed for the period concerned.
b. Yes, we have received CB payments since Jan.
c. My income is higher than my wife's, although we are both well under the £50 mark if you disregard the gratuity.

My question is: Do I declare my gratuity to the Child Benefit office as it was part of my income for that year?

A swift look over the page states, among other things "You might owe us money you received any other income that has not been taxed".

I take this to mean that I MUST declare my gratuity...

Informed thoughts on this would be much appreciated. As you know, tax/benefits etc are a veritable minefield and sometimes it's easier to find the answer in a place such as this as opposed to trying to read the whole of the HMRC website and still not have a clue...

 

[dhoby_bucket]

Not being an expert mate but, i would tend to take the viewpoint that the lump sum is not declared on your tax return purely any interest generated from it and then it only effects you if it were to take you into the 40% tax bracket. Your pension you receive is still taxable income so that would be the value they would be interested in.

 

[pie.thatcher]

Complicated, why not contact the CAB (citizens advise bureau) get some free impartial advice

 

[slim]

Surely the gratuity you are given when leaving the service is untaxed. I would have thought that it eqauated with a redundancy payment. it certainly can't be classed as annual income.

 

[Polto]

I thought that too, but others such as SWMBO for instance, are certain that it must be declared. Untaxed incomes do appear to have this requirement...however, is the gratuity an income? I suppose so in reality...

 

[vauxhall]

Tax and pensions are a minefield. I would suggest you speak to a decent Tax Financial Advisor to get some real chapter aand verse - Forces Pension Society and the White Ensign Association may be able to help. FPS do post on here sometimes, under the username Vauxhall, may be worth pinging a PM to that person.

Am on the case!

 

[Rigsby]

Hi Polto

"You have an individual income of over £50,000 a year, and
either you or your partner received any Child benefit payments after 7 January 2013, and
your income for the tax year (in this case 2012-13) is higher than your partners. The partner with the higher income is liable to pay the charge if both partners have income over £50,000." Unquote.

Polto, looking at it from another angle, irrespective of your lump sum, does your misses earn over 50K?

you have said that you are on the minimum wage - does this plus your pussers pension take you over the 50K threshold?

 

[Polto]

Hi Polto

"You have an individual income of over £50,000 a year, and
either you or your partner received any Child benefit payments after 7 January 2013, and
your income for the tax year (in this case 2012-13) is higher than your partners. The partner with the higher income is liable to pay the charge if both partners have income over £50,000." Unquote.

Polto, looking at it from another angle, irrespective of your lump sum, does your misses earn over 50K?

you have said that you are on the minimum wage - does this plus your pussers pension take you over the 50K threshold?

Our incomes, including pension do not put either/both of us over the 50k threshold...however if the gratuity is included for the year 2012/13 then I am over the threshold for that period, assuming of course that the gratuity is an income.

 

[Joint_Force_Harrier]

Lump sum is not taxed, however don't give George any ideas!!!

Pension is however.


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[Rachelthree]

When i applied for student finance i was advised to declare the lump sum my dad recieved the previous tax year, but as it was all taking a while to be approved i phoned them to enquire and they said that as it had been declared it had to be taken into account but legally and morally i could have left it out as it is not strictly classed as income in the same way, heisisbsksksnwkao! So yeah wise to get advice on it and hopefully it wont count

 

[Sharkey]

I would have thought income would include, pension, wages and interest from shares and savings etc which would include your lump sum, unless its under the bed in used £5, but not the savings themselves.

 

[vauxhall]

When I left the RN last October I received a large gratuity, in excess of £50k. I also receive a pension and am currently employed for 16hrs a week earning minimum wage. All of which the taxman is aware of. Happy days.

I have two children under the age of 18 for whom my wife and I are in the process of receiving child benefit. The latest changes state that I must pay a tax on this benefit if, and I quote (all the items are to apply in order to pay the charge):
"You have an individual income of over £50,000 a year, and
either you or your partner received any Child benefit payments after 7 January 2013, and
your income for the tax year (in this case 2012-13) is higher than your partners. The partner with the higher income is liable to pay the charge if both partners have income over £50,000." Unquote.

Taking those three points one at a time:
a. Does that include my gratuity as it is/was a form of income albeit not taxed for the period concerned.
b. Yes, we have received CB payments since Jan.
c. My income is higher than my wife's, although we are both well under the £50 mark if you disregard the gratuity.

My question is: Do I declare my gratuity to the Child Benefit office as it was part of my income for that year?

A swift look over the page states, among other things "You might owe us money you received any other income that has not been taxed".

I take this to mean that I MUST declare my gratuity...

Informed thoughts on this would be much appreciated. As you know, tax/benefits etc are a veritable minefield and sometimes it's easier to find the answer in a place such as this as opposed to trying to read the whole of the HMRC website and still not have a clue...

Please see the PM I have just sent.

 

[Polto]

Many thanks Vauxhall, Pm sent

 

[Rigsby]

Hi Vauxhall

any chance of posting your response to Polto to the wider audience?

thanks

 

[Polto]

Oh, alright then...

quote "I asked the question to my learned colleague and he told me that "The Gratuity is not income, it is a one-off lump sum and so does not need to be declared for such purposes, just as winning £50,000 on the lottery is not deemed to be income. The pension is, of course, quite a different matter, as would be the EDP income stream." Unquote.