things deductable re tax credits

kerryallc71

hi , I give tax credits our gross income ( before tax & national insurance are deducted ) and then I give them the figure of the stakeholder pension contributions .. tax credits deduct the stakeholder pension figure from the gross income figure , I always make sure they have a record of this .

my husbands gross wage figure does not include any stakeholder pension contributions .. p60 only shows taxable pay & tax paid & national insurance paid , nothing else .

imogen-p

MsShorty wrote: »

I also pay into a LGPS (local government pension scheme). The amount shown on your P60 is the amount that should be given to tax credits, as the figure shown on your P60 is your pay AFTER pension contributions have been taken off.

Likewise, your pay slips should show your gross pay, tax paid, NI paid and Pension contributions. The figure you should be giving to tax credits is your gross pay MINUS any pension contributions made.

So the figure I should be giving them is definitely £13,646 gross minus pension contributions, so giving a final figure of under 13,000 pa.

I'm still waiting for my P60 for 2010/11 - it's usually well into May before we get one. I'm hoping I get it before the renewal pack arrives. I'm trying to work it out from my payslips in case it doesn't.

imogen-p

zagfles wrote: »

This sounds very odd. A local authority scheme should be getting this right, your pay to date should be taxable pay (ie minus pension payments) otherwise they won't get your tax right.

Is your pension a salary sacrifice type pension, in which case the pension might already be deducted from your monthly gross pay and be presented in the deductions just for info?

What is your taxcode? How much tax & NI did they take off? What was the pension deduction? If you post all the numbers on your payslip inc year to date totals I'll try to work it out...

My tax code for last year was 647L

The pension contributions are taken off before tax and NI calculated as it's a contracted out scheme.

2010/11
Pay £13646 gross
from which was deducted pension contricution of £805 (5.9%)

Tax and NI was then paid on £12841 (13646 - 805)
tax £1272
ni £783

So should I be telling them my pay is £13646 or should I say £12841?

zagfles

imogen-p wrote: »

My tax code for last year was 647L

The pension contributions are taken off before tax and NI calculated as it's a contracted out scheme.

2010/11
Pay £13646 gross
from which was deducted pension contricution of £805 (5.9%)

Tax and NI was then paid on £12841 (13646 - 805)
tax £1272
ni £783

So should I be telling them my pay is £13646 or should I say £12841?

It should be 12841 - which is presumably the taxable pay to date figure on your March payslip and which should also be the figure on your P60 when you get it.

kerryallc71

my husbands is the total opposite ... ( tax code - 647l ) - 2010/2011

gross wage - £22'743.93
tax deductions - £3,252.80
national insurance deductions - £1,873.51
stake holder pension contributions - £897.00

but his p60 will show - £22'743.93 ( taxable pay )
tax - £3,252.80
NI - £1,873.51
his p60 will not show any pension contributions .

so when it comes to tax credits renewal we have to tell them my husbands pensions contributions , which will be the figure from his annual pension statement from legal & general .. which will be £897.00 plus basic tax relief ( martins gross pension contributions )

is this correct ? ..

thankyou for your help in advance ..

zagfles

kerryallc71 wrote: »

my husbands is the total opposite ... ( tax code - 647l ) - 2010/2011

gross wage - £22'743.93
tax deductions - £3,252.80
national insurance deductions - £1,873.51
stake holder pension contributions - £897.00

but his p60 will show - £22'743.93 ( taxable pay )
tax - £3,252.80
NI - £1,873.51
his p60 will not show any pension contributions .

so when it comes to tax credits renewal we have to tell them my husbands pensions contributions , which will be the figure from his annual pension statement from legal & general .. which will be £897.00 plus basic tax relief ( martins gross pension contributions )

is this correct ? ..

thankyou for your help in advance ..

Well, it sounds like it as he's being taxed on the whole 22743.

Is the stakeholder pension contribution coming out of his net pay, ie is the amount he actually gets paid equal to the gross minus tax minus NI minus pension? If so then yes he should deduct the pension contribution plus tax relief.

I ask because salary sacrifice type schemes can work in funny ways - the gross pay quoted can sometimes be after any salary sacrifice, so the pension contribution is already subtracted from the gross quoted. If this were the case then net pay would be gross minus tax minus NI, as pension has already been deducted. If this is the case then don't deduct pension contributions as they already have been deducted

kerryallc71

On my husbands monthly wage slip , it shows basic wage & overtime & shift bonus . When it's added together they don't deduct pension contributions before tax , NI is deducted .. The last thing to be deducted out of his wage is his stakeholder pension . When I've used a pay slip checker ( online calculator ) in the past just to check his wage is correct , I add in everything that's on his wage slip ( Inc 647l tax code ) and the pay slip calculator deducts tax & NI it then leaves it with a net pay , I then deduct my husbands pension contribution which is the same amount every month , and the figure I get after is always the one that's the same as it is in his wage slip . Hope you can understand my typing I'm using my iPod touch .

Thankyou for your help in advance .

kerryallc71

my husbands last monthly wage ( march 2011 - tax code 647l )
wage - £1'887.43
tax deducted - £269.40
national insurance deducted - £155.26
net pay = £1'462.77
stakeholder pension contribution / payment deducted - £74.75
net pay with pension payment deducted = £1'388.02 - his take home pay .

MsShorty

Hi imogen-p. All sounds exactly the same as me, even down to the 5.9% deductions! I have my gross pay, then my 5.9% pension deductions are taken off, followed by the tax and national insurance.

Tax Credits told me that I had to give them the figure of my salary AFTER pension deductions but BEFORE tax and national insurance had been taken off. This is the figure that I have always given tax credits and is the same figure as on your P60, as the figure on your P60 shows your pay AFTER pension deductions have been taken off.

Hope I am making sense!?!

zagfles

kerryallc71 wrote: »

my husbands last monthly wage ( march 2011 - tax code 647l )
wage - £1'887.43
tax deducted - £269.40
national insurance deducted - £155.26
net pay = £1'462.77
stakeholder pension contribution / payment deducted - £74.75
net pay with pension payment deducted = £1'388.02 - his take home pay .

Well it does look like in his case the pension contributions aren't deducted from taxable pay, he is being taxed on the full amount - I presume his scheme reclaims basic rate tax relief. So you need to deduct his grossed up contributions from his P60 income.

I think this is quite unusual, most employers would deduct pension contributions from gross pay so the tax is all sorted and the P60 will already be the right amount for both tax and tax credits.