Treatment of SIPP topup for gross income

BuildTheWall

I am looking to bring my gross / taxable income below 100k to be eligible for tax free childcare. 

I realised late that taxable income will be 102k this year due to a benefit from employer. The tax on the benefit has also been paid by employer, but this has resulted in grossing up income and taxes. If I pay 5k cash into my sipp now, will it bring my taxable income below 100k? 

xylophone

You need to reduce your "adjusted net income"?


https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/personal-allowances-planning

Presumably you are registered for self assessment?

Dazed_and_C0nfused

No, that would be a relief at source (RAS) contribution and they don't reduce taxable income.

But do you really need to reduce your taxable income?

Isn't tax free childcare entitlement based on adjusted net income?  Which is a totally different beast to taxable income.

BuildTheWall

https://www.gov.uk/guidance/adjusted-net-income

Thanks both. Looking at the example in the above link (Bill), I can deduct 5k to arrive at adjusted net income. 

Dazed_and_C0nfused

Relief at source pension contributions are the gift that keeps on giving!

1.  You get 25% added to your payment

2.  They increase your basic rate band meaning more in one can be taxed at 20% and less at 40%

3.  They reduce your adjusted net income, which is beneficial for Married Couple's Allowance, HICBC and tapered Personal Allowance purposes.  And TFC.

xylophone

2.  They increase your basic rate band meaning more in one can be taxed at 20% and less at 40%

See

https://forums.moneysavingexpert.com/discussion/comment/79942033/#Comment_79942033