Calculation of Adjusted Net Income for Childcare

mc1982_2

Good Evening everyone,

I have some doubts about the calculation of the Adjusted Net Income (ANI) for the 30 hours free Childcare. I read several posts here, but I did not find the right answer.

My situation is this one. I have a gross salary of 110K and my pension is salary sacrifice of 5% (5500). I do not have any other earnings or benefits or apply for other tax relief

I still do not understand what is my Adjusted Net Income. 

Is the ANI the gross salary after the salary sacrifice 110k - 5500 = 104500?

or should I take the taxable income (excluding personal allowance) which is 110K - 5500 - 10320 (personal allowance) = 94180?

Finally, do you know if a simple calculator exists for PAYE cases like this one, where it is possible to calculate ANI easily?


Regards

MC

Dazed_and_C0nfused

You cannot deduct salary sacrifice pension contributions as you aren't paying them.

They are employer contributions, that's why no pension tax relief is added when they are paid to the pension company.

Your starting point is your taxable pay of £104,500.

Neither can you deduct the Personal Allowance.  The Personal Allowance itself is based on adjusted net income, not a part of adjusted net income.

https://www.rossmartin.co.uk/private-client-a-estate-planning/income-losses-claims-reliefs/1448-adjusted-net-income

mc1982_2

Thank you very much for you reply. 

Does it mean that if I am going to increase the percentage of the salary sacrifice (for example 10%)

I can make my starting point 99000 and be below the 100K threshold?

Thanks
Massimo

Dazed_and_C0nfused

Yes.

But it's the end point that counts.

£99,000 taxable pay plus any other taxable income, such as (non ISA) interest and dividends.

mc1982_2

Thank you again for your answer.

This is quite useful. In my case starting point is basically the same of ending point as I do not have any other income except some interests of around 100 pounds per year.

Thank you again

Grumpy_chap

It would be worth the OP reviewing their retirement provision in-the-round to determine whether 5% (or10%) contributions will be sufficient to fund the retirement lifestyle desired.  Is there an employer contributions over and above the employer contribution through SS?

sheramber

mc1982_2 said:

Thank you again for your answer.

This is quite useful. In my case starting point is basically the same of ending point as I do not have any other income except some interests of around 100 pounds per year.

Thank you again

Which you still need to  include