High Income Child Benefit Tax Charge

Gillameena

Hi I’m confused as to how I work out my adjusted net income in order to determine the high income child benefit tax charge and need some clarification please. 

For example, if I earned £58K in FY21/22 and paid £2575 in to my workplace pension that year is my adjusted net income £58K-£2575=£55425? 

And so rather than using the £58K figure on my p60 when filling in my self assessment I would using the £55425 figure? 

Any help much appreciated. 

Dazed_and_C0nfused

You should never need to change the P60 figure on your return.

What method is used to contribute to the pension is the key factor.

Relief at source?
Net pay?

Salary sacrifice?

Gillameena

Thank you. I am not certain on the method. On my pay slip it looks like there is an amount paid each month for example £4234.33 and then there is a taxable pay section £4019.67. My pension payment that month was £214.66 and is the difference between the two up above which means my pension payments come off before I’m taxed. The figure on my P60 for the full tax year is the sum of all the taxable pay figures each month. I was taking this as my gross pay but maybe gross pay and taxable pay are different? My gross pay is the sum of ‘payments’ each month whereas my taxable pay is the sum of payments each month minus the sum of my pension pay each month ? If that’s the case I get it. Pension has already been taken in to account and so I should use the £58K figure. 

Plasticman

Gillameena said:

Thank you. I am not certain on the method. On my pay slip it looks like there is an amount paid each month for example £4234.33 and then there is a taxable pay section £4019.67. My pension payment that month was £214.66 and is the difference between the two up above which means my pension payments come off before I’m taxed. The figure on my P60 for the full tax year is the sum of all the taxable pay figures each month. I was taking this as my gross pay but maybe gross pay and taxable pay are different? My gross pay is the sum of ‘payments’ each month whereas my taxable pay is the sum of payments each month minus the sum of my pension pay each month ? If that’s the case I get it. Pension has already been taken in to account and so I should use the £58K figure. 

Yes, that's correct. The taxable pay figure on your P60 should already have had your pension payment removed so that's the figure you use.