Tax cedits , can you take off pension from earnings ?

deanos

As header, when you submit your earnings can you take off payment for a company pension ?

Eg earn £25k and pay £1.5k into a company pension , so you declare £23.5k as earnings , or do you have to declare the £25k

I've tried to search tinterweb and cant seem to find an answer apart from pages and pages of stuff i dont understand

Its also a S.M.A.R.T pension i have

thanks

zagfles

Yes but with a company pension it's nearly always already done, so if you earn £25k and pay £1.5k into a pension, your P60 will show £23500 and that's what you declare.

In a few cases the company pension comes from net income, there you can deduct the (gross) amount from your P60 pay, but you'll have a hard time convincing TCO you've done it right.

deanos

Thanks

Just looked at my last P60 and it just shows my full pay nothing deducted for pension, just tax & ni deducted

zagfles

Are you sure? (it won't actually show the pension deduction, ie itemise it).

Does the "gross taxable to date" on your payslip include your full pay rather than pay minus pension (compare two month's payslips and see what the difference is).

What kind of pension is it, is it a stakeholder type? Does the pension scheme reclaim tax relief? Your statements will show this.

If yes to all the above then you can deduct the gross amount of your contributions. Your pension scheme should give you this figure. The tax credits office may tell you that you can't deduct this, if so you'll need to write to them with evidence that your contributions come from net pay, ie pension statements, payslips etc.

Pont

Good question - never thought about this.

Just to clarify:-

Local Government employee in my case. Earn circa £25,000, pay £1,800 pa into Local Government pension scheme. Haven't been there long enough to receive a P60, but will probably be asked for details from TC soonish.

So do I state £25,000 or £23,200? Not sure if working for Local Government makes any difference to the answers posted above.

deanos

Im on final salary pension, my payslip shows full pay, then a deduction for smart pension which means i don't pay NI on my pension payments, just says "Smart Adjustment"

nomunnofun

deanos wrote: »

Im on final salary pension, my payslip shows full pay, then a deduction for smart pension which means i don't pay NI on my pension payments, just says "Smart Adjustment"

Don't see many of these around! Basically, everything posted to date by way of advice is correct and does not change because you are in a smart pension scheme - zagfles could not have known that you were part of this scheme. However, rather than your payslip showing your gross pay with pension contributions deducted, it shows your gross pay AFTER pension deductions - hence your confusion regarding the P60 entries. The smart scheme allows the employer to reduce your gross pay in this manner. Why? the answer is that you pay less National insurance - your gross pay for NI is lower.

In addition the employer will ensure that your pension contributions are as before - they also save employers national Insurance. In short you will be better off, saving NIC on an amount equivalent to your pension contribution.

I think the BBC operate such a scheme.

deanos

Ok i think i got it, so on my final payslip in March i just deduct the smart adjustments year to date that i have paid from the pay to date and submit that figure when claiming tax credit ?

nomunnofun

deanos wrote: »

Ok i think i got it, so on my final payslip in March i just deduct the smart adjustments year to date that i have paid from the pay to date and submit that figure when claiming tax credit ?

No - you declare the gross what is on your P60 which will be the same as the gross pay to date in March. The smart tax adjustment affects your net pay only - you get more in your hand, as they say, on the same salary.

deanos

ok, so i don't deduct anything just say whatever is on my payslip gross pay, so the original question i asked does not apply i cant take anything off for my pension because its a smart one

sorry for being a bit dense , these sorts of things baffle me

nomunnofun

deanos wrote: »

ok, so i don't deduct anything just say whatever is on my payslip gross pay, so the original question i asked does not apply i cant take anything off for my pension because its a smart one

sorry for being a bit dense , these sorts of things baffle me

Correct - it was simply the case that, by not mentioning this in the first instance, previous posters were inadvertently misled.