Child benefit higher rate tax charge 28 November 2022 at 9:21PM in Cutting tax 5 replies 162 views

adonis10

If salary sacrifice pension contributions bring your gross down below £50K, does the higher rate tax charge still apply? Id have thought not but info on the gov website suggests it is only pensions contributions from net pay. Doesn’t make sense as they only get reported what the employer pays gross so that could well be with ss contributions.

Dazed_and_C0nfused

adonis10 said:

If salary sacrifice pension contributions bring your gross down below £50K, does the higher rate tax charge still apply? Id have thought not but info on the gov website suggests it is only pensions contributions from net pay. Doesn’t make sense as they only get reported what the employer pays gross so that could well be with ss contributions.

Salary sacrifice means your employer is making additional contributions not you.  That's also why no pension tax relief is being added to your pension.

And you definitely cannot deduct employer contributions when calculating your adjusted net income, which is what HICBC is based on.

But you are overlooking a key factor here.  

What is your salary?

And what is the taxable pay on your P60?

adonis10

Dazed_and_C0nfused said:

adonis10 said:

If salary sacrifice pension contributions bring your gross down below £50K, does the higher rate tax charge still apply? Id have thought not but info on the gov website suggests it is only pensions contributions from net pay. Doesn’t make sense as they only get reported what the employer pays gross so that could well be with ss contributions.

Salary sacrifice means your employer is making additional contributions not you.  That's also why no pension tax relief is being added to your pension.

And you definitely cannot deduct employer contributions when calculating your adjusted net income, which is what HICBC is based on.

But you are overlooking a key factor here.  

What is your salary?

And what is the taxable pay on your P60?

Good point about employer making the contribution. £55K, of which £44K will be reported due to ss. So I think what you’re saying in my case is I’m good as taxable pay reported is under £50K.

Dazed_and_C0nfused

adonis10 said:

Dazed_and_C0nfused said:

adonis10 said:

If salary sacrifice pension contributions bring your gross down below £50K, does the higher rate tax charge still apply? Id have thought not but info on the gov website suggests it is only pensions contributions from net pay. Doesn’t make sense as they only get reported what the employer pays gross so that could well be with ss contributions.

Salary sacrifice means your employer is making additional contributions not you.  That's also why no pension tax relief is being added to your pension.

And you definitely cannot deduct employer contributions when calculating your adjusted net income, which is what HICBC is based on.

But you are overlooking a key factor here.  

What is your salary?

And what is the taxable pay on your P60?

Good point about employer making the contribution. £55K, of which £44K will be reported due to ss. So I think what you’re saying in my case is I’m good as taxable pay reported is under £50K.

Well it depends what other taxable income you have but your starting point would be £44k.

adonis10

Dazed_and_C0nfused said:

adonis10 said:

Dazed_and_C0nfused said:

adonis10 said:

If salary sacrifice pension contributions bring your gross down below £50K, does the higher rate tax charge still apply? Id have thought not but info on the gov website suggests it is only pensions contributions from net pay. Doesn’t make sense as they only get reported what the employer pays gross so that could well be with ss contributions.

Salary sacrifice means your employer is making additional contributions not you.  That's also why no pension tax relief is being added to your pension.

And you definitely cannot deduct employer contributions when calculating your adjusted net income, which is what HICBC is based on.

But you are overlooking a key factor here.  

What is your salary?

And what is the taxable pay on your P60?

Good point about employer making the contribution. £55K, of which £44K will be reported due to ss. So I think what you’re saying in my case is I’m good as taxable pay reported is under £50K.

Well it depends what other taxable income you have but your starting point would be £44k.

Apart from a tiny bit of bank interest, bigger all so my 2022/23 taxable income will be under £50K.

Therefore I think the answer is the one I wanted.

TheAble

Yes if all taxable income sums to less than 50k you are not liable for the charge.

Don't forget to take into account anything on your p11d eg private health insurance etc.