Nest pension contributions impact on child benefit high earner

Whoasamisami

Dazed_and_C0nfused said:

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.

Okay... I think I've done it correctly now... added the pension contributions plus the tax relief and the tiny interest payment... could have probably found some charitable donations to lower things but that would take some investigation as there was nothing of size... bill is greatly reduced thanks to the pension,  so naturally I'm paranoid still..
Really appreciate the your patience and the time you've taken in attempting to educate me! As ignorant as they come on this issue I am it seems!

Dazed_and_C0nfused

Whoasamisami said:

Dazed_and_C0nfused said:

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.

Okay... I think I've done it correctly now... added the pension contributions plus the tax relief and the tiny interest payment... could have probably found some charitable donations to lower things but that would take some investigation as there was nothing of size... bill is greatly reduced thanks to the pension,  so naturally I'm paranoid still..
Really appreciate the your patience and the time you've taken in attempting to educate me! As ignorant as they come on this issue I am it seems!

Once you're into HICBC territory pension contributions are incredibly tax efficient, especially if Child Benefit is being paid for several children!

With a RAS contributions there are at least six distinct elements that can be of benefit.

1.  The pension company adds 25% to your payment (20% of the gross contribution).

2.  The gross contribution increases your basic rate band meaning more income can be taxed at 20% and less at 40%

3.  The gross contribution reduces your adjusted net income reducing or negating any HICBC

4.  The gross contributions reduces your adjusted net income reducing any tapering of the Personal Allowance

5.  If the pension contributions mean you are no longer a higher rate payer you can have £1,000 saving nil rate band rather than £500

6.  You can become eligible for Marriage Allowance.

xylophone

https://www.gov.uk/child-benefit-tax-calculator

may help.

Strummer22

Dazed_and_C0nfused said:

You don't get to pick and choose what to declare.  

Well, technically you do, as a tax return is a self-assessment. You can put that you earned 2p if you like.

However, you can expect HMRC to come after you for any missing tax revenue if they ever get around to auditing your return, and knowingly falsifying a return to evade tax is illegal. So, on balance, it's probably best to not pick and choose what to declare!