tax credits & pensions

huffyharry

Probably a stupid question but what figure do i take off my income for tax credits. Pay £80 / month into pension. £80 x 12 =£960 but pension statement has £1200. Think i know the answer but just thought someone might clarify it. Thanks.

kerryallc71

hi , you are best contacting your pension provider & the person who deals with your wages at work to see how your pension is deducted from your wage ( net or gross ) ... ive added something,s below that may be able to help .. someone will be along to help if need anymore help .


- 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 .

https://forums.moneysavingexpert.com/discussion/3180440

also read this :

The employee’s contribution to the stakeholder pension scheme is made from the employee’s net pay – this means that it is deducted after tax, National Insurance and any other compulsory deductions have been made. Tax credits such as Working Tax Credit are not treated as pay and cannot be used to pay pension contributions from the payroll.
If the employee does not have enough net pay to allow you to deduct the full agreed amount for the stakeholder pension scheme provider, you don’t have to make a deduction. However, you can
make another arrangement (such as the employee paying as much as they can afford) if you,the employee and the scheme provider all agree.
If you need to decide which of several deductions to make from an employee’s earnings (for example, if their wages are not enough to cover all the deductions), stakeholder pensions are
classed as ‘voluntary deductions’. You must make statutory deductions (for example, tax and National Insurance) first, before voluntary deductions.
The employee’s contribution might reduce the amount of tax they pay or increase their Working Tax Credit, so they might want to check this with HM Revenue & Customs.
You will need to make sure your payroll system can cope with the deduction method you will be using. You will be responsible for making sure that the employee’s payment has been worked out correctly and sent to the scheme provider.


i hope you find this helpful , see you from kerry .

huffyharry

Thanks Kerry but im still confused. Should have said its not a works pension but a private pension in the bank, i pay when£960 but the £1200 is with the tax relief i think. So do i take £960 off my p60 figure for my income for tax credits.

kerryallc71

hi , this may help .. it will tell you about pension contributions and how to deduct them from your income for tax credit purposes ..

But i would say tax credits want your gross pension contributions ( inc tax relief ) ..


here is the link :

it is printable , i got one sent to me last year from tax credits ..

http://www.hmrc.gov.uk/forms/tc825.pdf

hope that helps ..

ps / it was only last year when i started to give tax credits my husbands gross pension contributions , the tax credits lady told me they need the amount of pension contributions that are shown on my husbands pension statement which do include tax relief ( gross contributions ) . we to never knew that we had to give them gross contributions , we had been giving them just my husbands normal monthly payments x12 not knowing we should of been giving them the gross amount of pension contributions , so we have been under paid tax credits for quite a few to many years .. we were told to add up all the other years that we had been giving them my husbands lower pension payments , but it would of mean't us going back 6-7 years . so i just left it as it was . there was even 1 year they never deducted my husbands pension payments , so im not sure how much we've been under paid over the years .

hope all goes well with your tax credits ..

zagfles

huffyharry wrote: »

Thanks Kerry but im still confused. Should have said its not a works pension but a private pension in the bank, i pay when£960 but the £1200 is with the tax relief i think. So do i take £960 off my p60 figure for my income for tax credits.

Definitely the gross 1200 figure - see the TC825 which Kerry quoted.

While you're at it make sure you deduct any gift aid payments you made, again grossed up. Surprising how many things qualify for gift aid, eg brownies, trips to the zoo, space centre, etc. Provided you signed the gift aid declaration of course.