Nest pension contributions impact on child benefit high earner

Whoasamisami

The title is basically the question!
Martin Lewis does state in his High earner child benefit article on the site, that these payments are deductible and reduce the adjusted net income.  However... when completing the tax return it clearly states pension contributions that come out before tax in pay are not applicable. 
So... which is it??? Does anyone know? 
Also, I believe that the figure given as result of the return being completed (without pension added) is incorrect... £100 =1% repaid... I'm at £53k ish but the charge is 41%...
Any ideas on why this would happen??

Appreciate any comments. 
I'd never completed a tax return before so excuse my utter ignorance
Thanks in advance 

Dazed_and_C0nfused

It's both.

Net pay contributions don't go on your tax return and therefore don't impact the HICBC at that point.  But if your salary is say £60k and you pay 10% in net pay contributions your taxable pay (amount on your P60) is only £54k.

So they are a factor it's just before you get to the tax return stage.

What other income have you included?

Taxable income which is taxed at 0% like (non ISA) interest and dividends is part of your adjusted net income and that is what HICBC is based on.

Whoasamisami

My only income is the salary on p60 then adjusted benefit of car on p11d... 

Should the P60 figure already allow for the pre-tax nest contribution?

Dazed_and_C0nfused

Whoasamisami said:

My only income is the salary on p60 then adjusted benefit of car on p11d... 

Should the P60 figure already allow for the pre-tax nest contribution?

It would if they were net pay.

But Nest's website indicates they operate relief at source.

Does your employer have a different arrangement?

If it is a really relief at source does your Nest pension account show they are adding 25% to your contributions? 

Whoasamisami

Dazed_and_C0nfused said:

Whoasamisami said:

My only income is the salary on p60 then adjusted benefit of car on p11d... 

Should the P60 figure already allow for the pre-tax nest contribution?

It would if they were net pay.

But Nest's website indicates they operate relief at source.

Does your employer have a different arrangement?

If it is a really relief at source does your Nest pension account show they are adding 2&% to your contributions? 

Nest contribution comes out at the same point as NI, tax etc... company contribution is added in same spot as gross wage. 

I've no knowledge of a different arrangement,  my understanding of this is somewhat hazy now!

Nest statement indicates tax relief added to my pot.

Have you any idea as to why the % of payment back would differ? Or am I just misinterpreting it... surely 41% would be £54100 adjusted net pay, not £53381 which is what I have entered.. there's no other monetary factors. 

Dazed_and_C0nfused

I don't know how you can complete your tax return without knowing which method is being used to make your pension contributions?

You surely need to establish that otherwise you can't get the correct result.

Relief at source (RAS) contributions are entered on your return and can have an impact on the High Income Child Benefit Charge.

You have said

Nest contribution comes out at the same point as NI, tax etc... 

And

when completing the tax return it clearly states pension contributions that come out before tax in pay are not applicable

You need to clarify which method is being used.

If it's net pay the taxable pay on your P60 will be noticeably less than your "salary".

If it relief at source then it doesn't have the impact on your P60 and you should see 25% being added to your contribution in your Nest account.

Finally, is there really no other income to declare?  No interest, not even small amounts?

Whoasamisami

Dazed_and_C0nfused said:

I don't know how you can complete your tax return without knowing which method is being used to make your pension contributions?

You surely need to establish that otherwise you can't get the correct result.

Relief at source (RAS) contributions are entered on your return and can have an impact on the High Income Child Benefit Charge.

You have said

Nest contribution comes out at the same point as NI, tax etc... 

And

when completing the tax return it clearly states pension contributions that come out before tax in pay are not applicable

You need to clarify which method is being used.

If it's net pay the taxable pay on your P60 will be noticeably less than your "salary".

If it relief at source then it doesn't have the impact on your P60 and you should see 25% being added to your contribution in your Nest account.

Finally, is there really no other income to declare?  No interest, not even small amounts?

I think it is safe to say my ignorance has been/is playing a big role here! Never looked at a tax return before the other week.. so hadn't ever given it a second thought..

I went back to basics and found each payslip from past year.. the pension is certainly not taken away before tax.. and is not allowed for in the 49k figure. . Which is purely from wages paid.. so this is RAS yes? 

No other income.. I have an ISA but it is well below the limit and very small interest payments on current account. The only other figure in play is the car benefit but that is a straight forward figure which I've added already. 

Dazed_and_C0nfused

No other income.. I have an ISA but it is well below the limit and very small interest payments on current account. 


Those two statement contradict each other.  Unless under £1 in total you need to include the non ISA interest on the return.

If you are now sure the pension is paid using relief at source then you do include that on the return.

Whoasamisami

Dazed_and_C0nfused said:

No other income.. I have an ISA but it is well below the limit and very small interest payments on current account. 


Those two statement contradict each other.  Unless under £1 in total you need to include the non ISA interest on the return.

If you are now sure the pension is paid using relief at source then you do include that on the return.

So you're saying i should be adding £22.08 gross interest from my current account?

uknick

Whoasamisami said:

Dazed_and_C0nfused said:

No other income.. I have an ISA but it is well below the limit and very small interest payments on current account. 


Those two statement contradict each other.  Unless under £1 in total you need to include the non ISA interest on the return.

If you are now sure the pension is paid using relief at source then you do include that on the return.

So you're saying i should be adding £22.08 gross interest from my current account?

Yes, if you're going to do the return correctly.

Dazed_and_C0nfused

Whoasamisami said:

Dazed_and_C0nfused said:

No other income.. I have an ISA but it is well below the limit and very small interest payments on current account. 


Those two statement contradict each other.  Unless under £1 in total you need to include the non ISA interest on the return.

If you are now sure the pension is paid using relief at source then you do include that on the return.

So you're saying i should be adding £22.08 gross interest from my current account?

A tax return is to declare all your taxable income so yes.  Or at least £22.  You don't get to pick and choose what to declare.  

The interest will be taxed at 0% but could change the HICBC.

For example if your adjusted net income was £53,880 without the interest you would have 38% HICBC.

With the taxable interest included your ANI would become £53,902 and you would have a 39% HICBC.