Tax Credits - Pension Contributions?

milliebear00001

Hi there

I was just looking at the calculator on the HMRC site for tax credits and noticed it mentions not including some pension contributions in your annual income calculations. The actual description is a little confusing and so I wanted to double check. I am a teacher, and pay about £100 a month into the Teachers' Pension Scheme. It is deducted from my salary and appears as a pension deduction on my payslip each month.

I have never deducted this amount when calculating my income for Tax Creidt purposes. Should I be?!

Thanks in advance.

MsShorty

Hi. I am employed in a primary school as a Higher Level Teaching Assistant. I pay into the Local Government Pension Scheme. As pension contributions are taken from my gross pay, prior to tax and national insurance being deducted, the figure shown on my P60 (which I then give to HMRC for tax credits purposes) is my pay after these pension contributions have already been deducted. I don't know if it is the same for the teachers' pension scheme.

In my case, Tax Credits advised me that they require the figure AFTER pension contributions have been deducted, but BEFORE tax and national insurance have been deducted.

Hope this is of some help to you. If not, I am sure someone more knowledgeable will be along soon.

kerryallc71

hi , my husbands pension contributions ( stakeholder ) are deducted from his wages after his tax & national insurance have been deducted ... my husbands pension contributions are paid on his net income and not his gross income . my husbands p60 does not show any pension deductions from his gross / taxable pay ... you may be best contacting your pension provider , or the person who deals with your wages at work they may be able to give you more of an idea how your pension is deducted from your wage ( net or gross deductions ) .. but child tax credits they need your income figure after your pension has been deducted .

- If your pension is deducted on gross ( before tax & national insurance ) is deducted you pay less tax & NI ( your p60 will show this ) .

- But if your pension is paid on net ( after tax & after national insurance ) is deducted you pay the normal rate of tax & NI ( this will not show on your p60 ) you will need to give tax credits the gross contributions figure from your pension statement , excluding any contributions your employer made to your pension .

... I hope ive got it right and you can understand me .

milliebear00001

Thank you.

OK, Pension people confirm my pension payments are deducted from my gross salary - before tax and NI are deducted. So...do I deduct them from my tax credit income calculations or not!?

kerryallc71

I think , if ive got it correct your p60 taxable wage figure should show your wage with your pension contributions already deducted ( that will be the figure tax credits needs ) ... someone might be long later to correct me if im wrong .. have you received your p60 yet ? ...

milliebear00001

No, I haven't received it yet.

kerryallc71

tax credits usually like you to have your p60 to hand when your doing your renewal , we usually get ours in may sometime , around the time we get our renewal pack from tax credits . I would check when your p60 turns up to see what wage figure to give tax credits . ive tried contacting tax credits when the renewal pack has turned up before my husbands p60 and they have told me to call back when his p60 has turned up . they do say though you can use your last pay slip of the tax year ( no.12 ) . I hope you can get your tax credits sorted , I hate this time of year in case they make mistakes , hope yours goes well ... see you from kerry .

zagfles

milliebear00001 wrote: »

No, I haven't received it yet.

Your taxable pay to date on your March payslip should show the correct figure, as your pension contributions will already have been deducted from this. This should be the same as your P60 - but probably safest to wait till you get the P60.

milliebear00001

Thanks for that - I just checked my last payslip and the taxable pay recorded on there is very close to what I make my taxable pay (having just worked it out manually!) so I am guessing that will be the correct figure to give to TC also.

MsShorty

Hi, again. As I suspected, your pension contributions are taken from gross pay. So, you are in the same position as I am. The figure on your P60 will show the amount after pension deductions have been taken from your pay. So, no need to carry out any further calculations - just give tax credits the amount on your P60.

I keep tax credits informed of any income changes throughout the year and you can also check the final figure by taking the total gross pay for the year from your March pay slip and then deducting total pension contributions for the year from the same pay slip. You should end up with the same figure as will appear on your P60, once received.

I always wait for the P60 to arrive before renewing, but I have always kept tax credits informed of changes throughout the year, using this method and have never been overpaid by a single penny over the last 3 1/2 years.

Hope this provides clarification.

milliebear00001

Thanks very much.

Apparently I cannot renew my claim until I get my renewal pack in the post anyway, so I can wait until I get my P60.

My problem, is that like many people, my payments have gone down since the beginning of the new tax year because of an overpayment that I now look unlikely to need to pay back, and the HMRC calc is saying I am now entitled to considerably more than I am being paid (based on the taxable income less pension payments last year).

I am keen to start receiving the higher, correct payments, rather than the low ones I am currently receiving!