Personal Pensions contributions question on tax credit calculstor

thunderb0lt

Hi All

I’m checking the tax credit calculator on GOV.UK to see whether I’m entitled to any Tax credits. I’ve come to the Deductions section and it’s asking ‘personal pension contribution and Gift Aid payments’

I just wanted to confirm that this is not asking about pensions payments made into a work pension scheme that is deducted from pay?

Also in the example, to calculate gross amount it multiples by 100 then divide by 80. Can you explain this please.

Last question, tax credit entitlement is based on prev year. What if I wasn’t entitled in the prev year but there is a change in my current circumstances that might mean I entitled based on current financial year.

Thanks

Caz3121

thunderb0lt wrote: »

Last question, tax credit entitlement is based on prev year. What if I wasn’t entitled in the prev year but there is a change in my current circumstances that might mean I entitled based on current financial year.

there is a disregard of £2.5k so if your current income expected for the year is more than £2.5k less than the previous year they will use the current years income plus £2.5k
You will likely apply, get a nil award, then contact with estimate of this years income

calcotti

thunderb0lt wrote: »

Also in the example, to calculate gross amount it multiples by 100 then divide by 80. Can you explain this please

If you pay £80 into a personal pension the government automatically top it up with £20 (which is a refund of the basic rate tax you have paid at source). So the gross contribution is £100.

A deduction at source for a work pension should not be included as the deduction is made before tax so no adjustment is necessary.

xylophone

A deduction at source for a work pension should not be included as the deduction is made before tax so no adjustment is necessary.

Only if the workplace scheme uses "net pay" - not all do.

See

https://www.gov.uk/workplace-pensions/managing-your-pension

thunderb0lt

Sorry, please excuse my ignorance but I am still not sure as to whether I include workplace pension amount. Say fir example, I am having £200 per month deducted based on gross pay do I enter £2400 into the box.

Thanks

calcotti

thunderb0lt wrote: »

Sorry, please excuse my ignorance but I am still not sure as to whether I include workplace pension amount. Say fir example, I am having £200 per month deducted based on gross pay do I enter £2400 into the box.

Thanks

Read the link in xylophone’s post. I think this means that if your employer uses ‘net pay’ you should not include workplace pension amounts, if your employer uses ‘relief at source’ you should include them.