Benefits in kind and pensionable earnings; lower earners

stoozie1

Hi,

I've just had a partly unsuccessful phone call with HMRC and then they referred me to the pensions advisory service, but I'm still a bit in the dark.

My scenario:

Some SE earnings (c.£500-1000/p.a)
Some zero-hours earnings at the nursery my son attends.

The nursery work entitles me to free childcare during my shift, as a benefit in kind. My original understanding was that benefits in kind increase ones pensionable earnings by their nominal value.

HMRC said I was still capped at my total actual earnings (grossed up)
PAS said that if I earned in excess of £8500 I could include the benefit in kind, and pay into my SIPP accordingly. I think this is more likely, seeing this: https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100#earnings However both said it was a bit niche for them to be sure, and neither knew if the benefit in kind was included in the earnings threshold.

I don't want to do the wrong thing, and so I wanted to ask the knowledgeable people on here.

a) does the £8500 include the perceived value of the benefit in kind?
b) if so, is my total (net) contribution: ((SE earnings + zero-hours earnings + benefit in kind)/80)*100
c) If I have also worked as a volunteer for some shifts, so on nil pay but getting free childcare, am I also allowed to add that free childcare value to my pensionable earnings?

Many thanks if anyone is able to help.

zagfles

Does the BIK increase taxable earnings? I thought workplace childcare was generally tax free, in which case you wouldn't be able to include it according to the PTM link you quoted.

stoozie1

thanks for taking the time to comment.

It is exempt up to a £55/week limit, which in some weeks I will exceed.

https://www.gov.uk/expenses-and-benefits-childcare/whats-exempt

zagfles

So the taxable part should count towards your income. So AIUI add your P60 and P11D amounts, that's how much you can contribute gross (so 80% of it net). It looks like the £8,500 limit was abolished in April 2016 so the PTM seems to be out of date quoting that. https://www.gov.uk/government/publications/income-tax-abolition-of-the-8500-threshold-for-benefits-in-kind