Adjusted net income for Child benefit - High Income Child Benefit Charge

Hi, can anyone offer guidance on whether employee contributions under workplace pension schemes need to be deducted from gross pay to calculate the adjusted net income for High Income Child Benefit Charge purposes? I had a gross income of £50,750 in the 22/23 tax year and then I made the basic contributions under a workplace pension scheme. I do not have any further income. My partner has a small income of £6500 and they receive the child benefit payments as well.

Any help would be appreciated.

Comments

  • sit1 said:
    Hi, can anyone offer guidance on whether employee contributions under workplace pension schemes need to be deducted from gross pay to calculate the adjusted net income for High Income Child Benefit Charge purposes? I had a gross income of £50,750 in the 22/23 tax year and then I made the basic contributions under a workplace pension scheme. I do not have any further income. My partner has a small income of £6500 and they receive the child benefit payments as well.

    Any help would be appreciated.


    It all depends on which method was used to make the contributions.  Some you can deduct and others you can't.

    Net pay = you cannot deduct them
    Relief at source = you can deduct them
    Salary sacrifice = you cannot deduct them

    Net pay and salary sacrifice are already factored into your P60 taxable pay figure so if you deducted them you would be double counting them.
  • With regards to interest and dividends being added to adjustable income. Is it just taxable interest and dvidend?

    e.g. I receive £400 interest, this is under the £500 personal allowance for a 40% tax payer, so would not be included.

    e.g. I receive £600 interest this is over the £500 personal allowance for a 40% tax payer, so the £100 would be included.
  • There are no extra "allowances" for interest or dividends.

    All taxable income is included, even that which is taxed at 0% courtesy of the savings and dividend nil rate bands (aka Personal Savings Allowance and Dividend Allowance).

    ISA interest wouldn't be included as that is tax exempt.

    In your examples the £400 would form part of your adjusted net income.

    As would the £600.
  • There is a bit about it here Marginal rates (taxpolicy.org.uk) Also on Twitter  or X as it is now I saw  this TC 08970.pdf (tribunals.gov.uk)  so it is causing trouble for lots of people.
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