Does pension contribution affect tax credit?

halconi

Greetings fellow moneysavers,

After a long time lurking I've taken the plunge and registered, hoping someone can answer my first posting:

I understand that pension contributions can be deducted from earned income declared for tax credit purposes, but does this apply when the contribution is made by a non-working partner?

If so, how would this be entered on the claim form - as a negative income?

CLAPTON

a non working person can only contribute up to 2880 per annum (grossed up to 3,600)

Loughton_Monkey

A wage earner can contribute to a pension scheme without affecting benefits, and still get tax relief.

A non wage earner, as already noted, can invest up to £2,800 (net) and receive £720 government contribution.

halconi

Thanks for the replies, but I don't think you understood my question - I was referring to Child/Working Tax Credit not income tax.

When you are close to one of the thresholds, every extra pound of income results in a withdrawal of 41p of tax credit. You are however allowed to deduct pension contributions when calculating income.

So what I want to know is does it matter whether the pension contribution is made by the working or non-working partner.

I suspect I may have (another) long (and expensive) phone call to make to the Tax Credit helpline.

Just_landed

Maybe trying this question on the Benefits & Tax credits board you might get a response there.




http://forums.moneysavingexpert.com/forumdisplay.php?f=139

zagfles

Yes - see http://www.hmrc.gov.uk/manuals/tctmanual/TCTM04003.htm

Google TC825 for the relevant working sheet which tells you how to fill in the boxes on the claim form/renewal.