Child Benefit and Pension

whitesatin

Not sure if this is in the right place, please feel free to move it to somewhere better, if so.

This is an interesting article I got in my email today. I have forwarded it to my daughter as it might benefit her.

http://www.thisismoney.co.uk/money/pensions/article-2192562/Trick-avoid-losing-child-benefit-boost-pension.html?ito=newsletter

Hope I haven't contravened any rules.

stormyrider

It's an interesting article but leaves a couple of questions unanswered for me...

1. Is it clear that HMRC will use your gross earning less gross pension contributions as the basis for assessment? I haven't seen this in print anywhere.

2. Is there still a good chance that the goverment will reverse this before April as it looks like it's a complete mess of a change and will really stuff some families up.

Anyone who has links to other informed articles on this please do share.

Thanks!

GRM

stormyrider wrote: »

It's an interesting article but leaves a couple of questions unanswered for me...

1. Is it clear that HMRC will use your gross earning less gross pension contributions as the basis for assessment? I haven't seen this in print anywhere.

http://www.hmrc.gov.uk/budget2012/tiin-0620.pdf

Middle of page 2.

stormyrider

Many thanks GRM - very useful.

The wording took me a while to decipher:

Adjusted net income is calculated in a series of steps. The starting point is "net income" which is the total of the individual’s income subject to income tax less specified deductions, the most important of which are trading losses and payments made gross to pension schemes. This net income is then reduced by the grossed-up amount of the individual’s gift contributions and the grossed-up amount of the individual’s pension contributions which have received tax relief at source. The final step is to add back any relief for payments to trade unions or police organisations deducted in arriving at the individual’s net income. The result is the individual’s adjusted net income.

...but essentially it is gross income less grossed up pension payments.

I'm going to have to weigh up whether taking a car rather than a car allowance is a sensible thing to do next year despite the punitive charges on a company car and look at whether whacking more into my stakeholder pension plan is worthwhile.

I do hope the government go back on this or at least make it so that personal allowances can be shared between married couples/civil partnerships so that families where there is a stay-at-home parent are not penalised.

princessdon

stormyrider wrote: »

I do hope the government go back on this or at least make it so that personal allowances can be shared between married couples/civil partnerships so that families where there is a stay-at-home parent are not penalised.

I can't see them backing down at all, or sharing allowances. That is the main issue I have with this removal of benefit. Not the removal per se - but the fact that people like myself with dual incomes and dual tax allowances could potentially still have the benefit whilst others with 1 earner (whether SAHP or single parent) who can potentially have half the income will lose it.

As they are introducing UC- I see no reason why it couldn't have been taken into consideration then - Ie made it part of the Tax Credit system - so ANY family earning over that amount lost the benefit.

BigAunty

There is a thread here that discusses at length if it is legitimate to divert wages into a pension pot to maximise benefit entitlements, and while it to'd and fro'd like most threads, it seems to be legit.

The OP had figured out that if they diverted most of their income into a pension, they'd be comfortably off in benefits and have a huge pension pot to retire.

https://forums.moneysavingexpert.com/discussion/3655837