P60 help

Bagenz

Hi, I pay around 55% of my wage into my pension which results in me going below the minimum wage, my recent pay slip shows deductions off £166.32 in my deductions side of my wage slip which Is not under my gross payments.

Period 3/12 My Gross pay YTD is £4,505.22 this period £1,316.34
Period 3/12 Taxable pay for the year is £4,338.90 this period £1,150.02
Can anybody 100% confirm that my P60 will show the taxable pay and not the gross pay.
Which in this case will be around £14,688
I have been investigated twice my HMRC and I am sure I will be again as I receive working tax credits and child tax credits based on the figures I have given in this case the £14,688 figure.
I have contacted my employer and they are unsure and have passed this on to another department.
Thankyou

Dazed_and_confused

Only your employer can tell you what will be shown on your P60.

But is should be your taxable pay for the tax year.

What does the £166.32 relate to?

I pay around 55% of my wage into my pension

Are you certain about this? From your post it seems like a salary sacrifice arrangement. Which means you don't pay anything into a pension and aren't entitled to any pension tax relief. You give up the right to part of your salary and in return your employer contributes to the pension for you.

Bagenz

Thank you for your responce
The £166 is the amount of money that takes me over the Salary sacrafice rate and into Non salary sacrafice AVC.
This is classed as having received tax releif this is why my gross pay is more than my taxable pay
I have been doing this for 8 years on a salary that ranged from 26 to 30k, my P60 last year showed £19,000 or so, just trying to be smart with tax, tax code currently is S1413M. My P60 at the end of this year will either be In the 14k or 16k range depending if it is based on taxable pay.
My concern is I need to be accurate as I have given HMRC the 14k total, I have went from 45% to 55% only in the last month so this is my first wage since the change.

Moc up of my pay slip for this month

Payments ________________________________ Deductions_________ Ytd_________ this period
Salary £2530.85 ______________________ Tax paid __________£155.67 ______£19.91-
Pens SS £151.85- _______________________ emp NIC __________ £281.78 ______ £71.88
Pens SS AVC £1,062.66- ___________________ Pens. AVC ____ ______£166.32 ______ £166.32

______ Gross payment £1,316

_________________ YTD _____________ This Periid
Gross pay ________£4,505.22 _________£1,316.34
Taxable pay ______£4,338.90 _________£1,150.02
Pensionable pay _£7,592.55 _________£2,530.85

Dazed_and_confused

The AVC sounds like a "net pay" arrangement.

With this you get any tax relief due by your taxable pay being reduced by the £166, so your employer calculated any tax due on the £1,150 instead of the salary of £1,316.

Don't forget that if you have sizeable amounts of savings interest your taxable income of say £15k means you use a chunk of the savings starter rate (and then you get the Marriage Allowance tax credit to reduce your tax bill). The tax code of S1413M doesn't mean you have a larger Personal Allowance.

squirrelpie

which results in me going below the minimum wage

Excuse my ignorance but I thought pension contributions weren't allowed to take you under minimum wage?

xylophone

Excuse my ignorance but I thought pension contributions weren't allowed to take you under minimum wage?

https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye

A salary sacrifice arrangement must not reduce an employee’s cash earnings below the National Minimum Wage (NMW) rates. Employers must put procedures in place to cap salary sacrifice deduction and ensure NMW rates are maintained.

Bagenz

SS rule says you cant take your wage below minimum wage but you can use AVC contributions to take you below, these allow 100% of salary or up to £40,000, but you would have to pay your NI contributions,
This allows you if you can afford it to adjust your wage so you maximize your tax benefits.
You can use a salary calculator to work out your take home pay.

Limits to your tax-free contributions
You usually pay tax if savings in your pension pots go above:

100% of your earnings in a year - this is the limit on tax relief you get
£40,000 a year - check your ‘annual allowance’

GunJack

One question - why are you taking so much of your salary out and then claiming tax credits??? Your gross shows a salary of £30k a year, why aren't you using that for living and NOT taking tax credits?

Seems to me like HMRC should be taking a much closer look at your affairs.......

xylophone

One question - why are you taking so much of your salary out and then claiming tax credits??? Your gross shows a salary of £30k a year, why aren't you using that for living and NOT taking tax credits?

Seems to me like HMRC should be taking a much closer look at your affairs.......

Because she can......?

https://www.entitledto.co.uk/help/tax-credit-pension-contributions


https://revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/what-is-income/calculating-tax-credits-income/

JoeCrystal

GunJack wrote: »

One question - why are you taking so much of your salary out and then claiming tax credits??? Your gross shows a salary of £30k a year, why aren't you using that for living and NOT taking tax credits?

Seems to me like HMRC should be taking a much closer look at your affairs.......

It was beneficial to be able to do that when I was at a meagre salary. It was the only reason I was able to afford a high pension contribution at the time back then. HMRC did, however, send me letters asking for proofs of pension contributions every year. Universal Credits, on the other hand, is a bit more challenging to do (due to actual savings limits) so were not be able to take advantage of that particular aspect (until I pay off the mortgage until then anyway).

Dazed_and_confused

Seems to me like HMRC should be taking a much closer look at your affairs.......

The op did mention this in the first post.

I have been investigated twice my HMRC and I am sure I will be again