High income child benefit charge...oh ****

Associate
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I think this could affect me soon. Is it simply a case of checking your P60 and seeing if your earnings are 50k or over? Last years P60 figure was still in the late 40s.

I get teachers pension and childcare vouchers which reduces my taxable income right? Sorry, not too knowledgable about this but with my overall salary now at 58 this year I think I need to clue myself up as my taxable pay may now drift over the limit!?

Your contributions to your pension, if done via salary sacrifice, reduce your taxable pay, as does childcare vouchers.
 
Associate
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This year I decided to pay for this by doing it through PAYE in 2020-21, so my tax code will be adjusted to pay it off over 12 months rather than pay the upfront before 31 January. Had to get the tax return filed prior to 30 December but not a bad option methinks. I might think differently come April!
 
Soldato
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Your contributions to your pension, if done via salary sacrifice, reduce your taxable pay, as does childcare vouchers.
I didn't realise this...

My last place of work, which was where I was at for many years ran a salary sacrifice scheme, however I didn't deduct my pension contributions from my declared salary when doing the Self Assessment. I did try to query it with HMRC years ago, but the chap either didn't know and/or wasn't particularly helpful, but suggested I could write to HMRC to try to claim it back. I am hoping from your comment that there could be some merit in this??
 
Associate
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I didn't realise this...

My last place of work, which was where I was at for many years ran a salary sacrifice scheme, however I didn't deduct my pension contributions from my declared salary when doing the Self Assessment. I did try to query it with HMRC years ago, but the chap either didn't know and/or wasn't particularly helpful, but suggested I could write to HMRC to try to claim it back. I am hoping from your comment that there could be some merit in this??
If the window for filing an amended return has passed, you will need to write to HMRC to tell them of any corrections. A refund can be claimed up to four years from the end of the tax year to which it relates.
 
Soldato
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On the self assessment form, it said any pension payment through your company does not reduce taxable salary.

I understood it that you'd have to make extra voluntary payments above your what you do through the company.
 
Soldato
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It seems pretty confusing because I thought it was based on adjusted net income which the government site says
What adjusted net income is
Adjusted net income is total taxable income before any Personal Allowances and less certain tax reliefs, for example:

trading losses
donations made to charities through Gift Aid - take off the ‘grossed-up’ amount
pension contributions paid gross (before tax relief)
pension contributions where your pension provider has already given you tax relief at the basic rate - take off the ‘grossed-up’ amount

https://www.gov.uk/guidance/adjusted-net-income

Which includes pension contributions paid gross, which I assume means before it's taxed.
 
Soldato
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Even the;

https://www.gov.uk/child-benefit-tax-calculator

Says to enter "Salary before tax (with pension contributions deducted)"

For me I pay £350.00 a month to my pension and it's deducted before tax, my P60 reflects this. I'm right on the line with this as I also sacrifice £1488.00 a year for child care vouchers but for the year ending April 2019 I received a dividend of £3750.00.

My understanding from the give site is my pension contributions leave me under the threshold.
 
Soldato
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If your P60 shows a income of 60k would that value be minus your salary sacrifice pension contributions?

My P60 shows what my taxable salary is after the pension has been taken out. For example;

Salary £X pa
Pension at £Y pcm
Childcare vouchers £Z pcm

P60 shows, in the earning this year box
X - (Y12+Z12)

But I think it very much depends on how your pension is set up.
 
Associate
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On the self assessment form, it said any pension payment through your company does not reduce taxable salary.

I understood it that you'd have to make extra voluntary payments above your what you do through the company.
That refers to pension payments being made by your company/employer to your pension. For instance, my employer puts 4% into my pension and I put in a minimum of 4% (6% this year). My contribution is deductable from my taxable pay, the company's contribution is not.

If you think about your overall package as being Salary of say £55k plus company making contributions to your pension of 5% and then you do a contribution of 5%. Your company is putting £2,750 into your pension and you are also putting £2,750 into your pension. However as the company's contribution is never counted towards your taxable pay you can't deduct it from your salary. The 5% you put in reduces your taxable pay to £52,250.

If this is done through salary sacrifice then you're getting the tax relief at your marginal rate of tax (40%) and saving NI as well and your P60 should show £52,250.

There are three different ways that you receive tax relief on your contributions though:


1. Your employer deducts your contributions from your pay before they deduct tax from your pay.

This means that you receive tax relief at the highest rate of tax that you pay. This is called a net pay arrangement. You can find out if you’re in one of these schemes by looking at the scheme booklet or asking the scheme administrator.

2. Your employer takes your contribution from your net pay (after tax has been deducted but before they pay you) and pays this to your pension provider on your behalf.

This method is most likely if you’re a member of a group personal pension, group self-invested personal pension, or group stakeholder pension scheme, but could also apply to other types of personal pension schemes. This is called relief at source.

The pension provider then claims back basic rate tax at 20% from HMRC, and adds this to your pot. So, for example, if your employer has deducted a contribution of £80 from your net pay, your pension provider claims back a further £20 so a total gross contribution of £100 is paid into your pension.

If you’re a higher rate taxpayer, you can claim further tax relief (at your higher rate less the basic rate already claimed on your behalf) from HMRC. This is usually claimed through your self-assessment tax return, although HMRC may also adjust your tax code to give you this additional relief.

3. If you're paying pension contributions through a salary sacrificie arrangement agreed with your employer, this is treated as an employer contribution, with the same effect for you as receiving tax relief but also with a saving on NI contributions as i stated above.
 

LiE

LiE

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I badgered them and finally got my figures. The interest wasn't too bad really, and no penalties.

Here are my figures for those interested.

2015 - 2016: £78.00 - This was a partial year as our son was born Oct 2015. They deemed the amount too low to pay back so nothing for this year.

2016 - 2017: £742.00 - £46.52 interest added.

2017 - 2018: £344.00 - £10.68 interest added

2018 - 2019: £1,076.00 - I submitted this via self assessment. As I don't use self assessment it took a while to register which meant I missed the end of December so they want it all by end of Jan.

I cancelled the benefit back in November so will have some more to pay for 19-20 tax year.
 
Associate
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2 Sep 2007
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My P60 shows what my taxable salary is after the pension has been taken out. For example;

Salary £X pa
Pension at £Y pcm
Childcare vouchers £Z pcm

P60 shows, in the earning this year box
X - (Y12+Z12)

But I think it very much depends on how your pension is set up.

Thanks.
 
Associate
Joined
5 Nov 2005
Posts
2,159
I badgered them and finally got my figures. The interest wasn't too bad really, and no penalties.

Here are my figures for those interested.

2015 - 2016: £78.00 - This was a partial year as our son was born Oct 2015. They deemed the amount too low to pay back so nothing for this year.

2016 - 2017: £742.00 - £46.52 interest added.

2017 - 2018: £344.00 - £10.68 interest added

2018 - 2019: £1,076.00 - I submitted this via self assessment. As I don't use self assessment it took a while to register which meant I missed the end of December so they want it all by end of Jan.

I cancelled the benefit back in November so will have some more to pay for 19-20 tax year.

For the back dated stuff do they want it all at once? I'm just about to blow my spare cash on 2018-19 self assessment stuff...
 

LiE

LiE

Caporegime
Joined
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Posts
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Location
Milton Keynes
For the back dated stuff do they want it all at once? I'm just about to blow my spare cash on 2018-19 self assessment stuff...

I spoke to self assessment (0300 200 3827) and was able to set up a payment plan for everything including the 18-19 self assessment I did. Paying back at £200pm.
 
Associate
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5 Nov 2005
Posts
2,159
I spoke to self assessment (0300 200 3827) and was able to set up a payment plan for everything including the 18-19 self assessment I did. Paying back at £200pm.

Thanks for info that sounds good, I have not even received my numbers yet, I did my declaration in mid December, when did you do yours?
 
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