Deducting pension from gross income for TC renewal

milliebear00001

Hi there

I posted a while back about whether I should deduct my contributions to the Teachers' Pension Fund from my salary calculations for TC purposes. General consensus was that I should have been doing this (I hadn't ever deducted it before).

I was all set for deducting it from last years salary when the renewal paperwork came through, but I have just received the paperwork and on the guidance it states I should not deduct any pension contributions that are paid through an employer. It specifically mentions things like payments to a stakeholder pension as being OK.

My pension contributions are paid directly from PAYE so they 'are paid through my employer'. Am I right in now thinking that I have to declare them as part of my income, even though the previous guidance was that I should not include them?

Confused!

zagfles

milliebear00001 wrote: »

Hi there

I posted a while back about whether I should deduct my contributions to the Teachers' Pension Fund from my salary calculations for TC purposes. General consensus was that I should have been doing this (I hadn't ever deducted it before).

I was all set for deducting it from last years salary when the renewal paperwork came through, but I have just received the paperwork and on the guidance it states I should not deduct any pension contributions that are paid through an employer. It specifically mentions things like payments to a stakeholder pension as being OK.

My pension contributions are paid directly from PAYE so they 'are paid through my employer'. Am I right in now thinking that I have to declare them as part of my income, even though the previous guidance was that I should not include them?

Confused!

Your pension contributions should already have been deducted from your taxable/P60 earnings, so if you declare your P60 earnings (rather than your full annual salary) you will be declaring the correct amount.

Some people have stakeholder pension contributions deducted from net pay rather than gross - but this almost certainly won't apply to a local govt scheme.

milliebear00001

So does it not matter that my pension contributions are paid via my employer - it is this I am particularly confused about!

I am thinking then, that gross pay is not the same as taxable pay. My gross salary is the amount I have stated as my annual pay on my employment contract, but my taxable pay (as stated on p60) is gross salary minus my pension contributions - is that right? If so, am I right that it is my taxable pay, rather than gross pay, that I need to declare to TC?

zagfles

milliebear00001 wrote: »

So does it not matter that my pension contributions are paid via my employer - it is this I am particularly confused about!

I am thinking then, that gross pay is not the same as taxable pay. My gross salary is the amount I have stated as my annual pay on my employment contract, but my taxable pay (as stated on p60) is gross salary minus my pension contributions - is that right? If so, am I right that it is my taxable pay, rather than gross pay, that I need to declare to TC?

Yes. If you look at the "gross taxable to date" (or similar wording) on your March payslip, that should be same as your P60, and should equal your annual salary on your contract plus any overtime/bonus/allowances etc minus pension contributions.

The reason for the guidance stating that pension contributions paid through an employer should not be deducted is that most people will use their P60, rather than contracted salary, to declare their income. And pension contributions are nearly always already deducted from the P60 income, so they don't want people deducting them twice!

MsShorty

Hi milliebear00001.

I remember your previous post and I remember advising you at the time, as I am also in the LGPS, working as a primary school HLTA.

I have just renewed my tax credits for the 4th year in a row and, as per my advice to you, declared the figure on my P60 - my gross salary minus the pension contributions.

The same will apply to you. Hope this helps.