Adjusted net income for CB purposes

stuart746

Hello,

Just looking for a bit of advice, please.

My wife and I earn over the £50k threshold for CB payments, my wife earns around 65k and I earn around £56k. We are both PAYE workers - my wife is a school leader. However, we also make gross pension contributions from salary, employee contributions at around 11% each + substantial AVC contributions (taken from salary gross before tax). So, unless I am very much mistaken, presumably both these contributions need to be deducted from gross salary annually to work out adjusted net Income... is that right, or is there another way to do the calculation? This is the first year both our salaries have been above the threshold, hence the question. I'm also curious as to whether we would have to declare in a tax return (which seems unusual for PAYE), or just contact HMRC around April to see what the deduction would be from CB payments.

Thank you.

Dazed_and_C0nfused

HICBC is only dealt with via Self Assessment.

You can deduct pension contributions but be careful not to deduct "net pay" contributions twice, they will have already been deducted in arriving at the P60 taxable pay amount HMRC are interested in (salary is often irrelevant for tax purposes).

stuart746

Ok thanks, that's helpful.

Just a point to clarify, given P60 is not issued until the end of the tax year how should we calculate the net pay contributions and ensure they are not deducted twice? I'm assuming that once the self assessment is submitted that this is then checked against the P60 from the employer...?

Sorry, this is the first time completing this so want to get it right.

zagfles

You don't deduct anything, net pay conts are already deducted from taxable pay. Just look at taxable pay on your payslip, the total taxable to date should help you work out what your year end total will be. If taxable pay is under £50k you shouldn't even need to do a tax return, if the CB charge is the only reason.

stuart746

Thanks, seems straightforward enough.