child benefit threshold

smk77

I currently pay into my pension with salary sacrifice. I have ensured that this keeps  my income below £50k for child benefit purposes. However, a recent pay rise puts me above this.

Any changes to my pension contributions wont be effective until 1st April which is obviously no good.

I can make a one off pension contribution now and I understand that I will then be able to claim tax relief. However, will this be enough for HMRC to see my income below £50k (if my additional pension contribution is the amount above £50k I expect to earn)? e.g. if I expect my taxable income to be £52k, can I contribute £2k and HRMC won't want anything paid back.

springboot

Yes, making a one-time pension contribution before the tax year ends could lower your taxable income enough to keep you eligible for full child benefit without repayment to HMRC. Contributing £2k, for instance, if your expected taxable income is £52k, could bring it down to £50k, meeting the threshold.

smk77

springboot said:

Yes, making a one-time pension contribution before the tax year ends could lower your taxable income enough to keep you eligible for full child benefit without repayment to HMRC. Contributing £2k, for instance, if your expected taxable income is £52k, could bring it down to £50k, meeting the threshold.

I made the contribution a week ago. I checked my final pay slip for the year a couple of days ago and it looks as though I was 34p off in my calculations! So, my total taxable pay is £50,000.54. I think i'll just add an extra £25 in (minimum amount).

I need to register for self assessment now though?

Dazed_and_C0nfused

smk77 said:

springboot said:

Yes, making a one-time pension contribution before the tax year ends could lower your taxable income enough to keep you eligible for full child benefit without repayment to HMRC. Contributing £2k, for instance, if your expected taxable income is £52k, could bring it down to £50k, meeting the threshold.

I made the contribution a week ago. I checked my final pay slip for the year a couple of days ago and it looks as though I was 34p off in my calculations! So, my total taxable pay is £50,000.54. I think i'll just add an extra £25 in (minimum amount).

I need to register for self assessment now though?

HICBC doesn't apply until your adjusted net income reaches £50,100.

Have you definitely calculated it correctly?

You need to include all taxable income, even if some is taxed at 0% like interest and dividends can be.

smk77

Dazed_and_C0nfused said:

smk77 said:

springboot said:

Yes, making a one-time pension contribution before the tax year ends could lower your taxable income enough to keep you eligible for full child benefit without repayment to HMRC. Contributing £2k, for instance, if your expected taxable income is £52k, could bring it down to £50k, meeting the threshold.

I made the contribution a week ago. I checked my final pay slip for the year a couple of days ago and it looks as though I was 34p off in my calculations! So, my total taxable pay is £50,000.54. I think i'll just add an extra £25 in (minimum amount).

I need to register for self assessment now though?

HICBC doesn't apply until your adjusted net income reaches £50,100.

Have you definitely calculated it correctly?

You need to include all taxable income, even if some is taxed at 0% like interest and dividends can be.

The additional payment I made to my pension was a contribution from my bank account to pension provider rather than through my employer. I'd left it too late to increase via employer. After all my pension contributions through salary sacrifice etc, my taxable income on my final 22/23 payslip was £51,000.54. The additional payment I made was £10000. Income from interest will be below the allowance (£1k?)  and no dividends.

BoGoF

smk77 said:

Dazed_and_C0nfused said:

smk77 said:

springboot said:

Yes, making a one-time pension contribution before the tax year ends could lower your taxable income enough to keep you eligible for full child benefit without repayment to HMRC. Contributing £2k, for instance, if your expected taxable income is £52k, could bring it down to £50k, meeting the threshold.

I made the contribution a week ago. I checked my final pay slip for the year a couple of days ago and it looks as though I was 34p off in my calculations! So, my total taxable pay is £50,000.54. I think i'll just add an extra £25 in (minimum amount).

I need to register for self assessment now though?

HICBC doesn't apply until your adjusted net income reaches £50,100.

Have you definitely calculated it correctly?

You need to include all taxable income, even if some is taxed at 0% like interest and dividends can be.

The additional payment I made to my pension was a contribution from my bank account to pension provider rather than through my employer. I'd left it too late to increase via employer. After all my pension contributions through salary sacrifice etc, my taxable income on my final 22/23 payslip was £51,000.54. The additional payment I made was £10000. Income from interest will be below the allowance (£1k?)  and no dividends.

£1000 or £10000? Net or gross.

You have misunderstood how it works with savings. What is the actual amount of interest? This is then added to your £51000 payslip figure to get your taxable income. The 'allowance' is not a tax free allowance as such, it's taxable income with a 0% rate up to £1000 if you are a basic rate taxpyer, £500 if 40%.

sheramber

The personal savings allowance of £1k is taxable, but the current rate is 0%.

It is counted for adjusted net  income for HIBC so you need to add it in.

smk77

BoGoF said:

smk77 said:

Dazed_and_C0nfused said:

smk77 said:

springboot said:

Yes, making a one-time pension contribution before the tax year ends could lower your taxable income enough to keep you eligible for full child benefit without repayment to HMRC. Contributing £2k, for instance, if your expected taxable income is £52k, could bring it down to £50k, meeting the threshold.

I made the contribution a week ago. I checked my final pay slip for the year a couple of days ago and it looks as though I was 34p off in my calculations! So, my total taxable pay is £50,000.54. I think i'll just add an extra £25 in (minimum amount).

I need to register for self assessment now though?

HICBC doesn't apply until your adjusted net income reaches £50,100.

Have you definitely calculated it correctly?

You need to include all taxable income, even if some is taxed at 0% like interest and dividends can be.

The additional payment I made to my pension was a contribution from my bank account to pension provider rather than through my employer. I'd left it too late to increase via employer. After all my pension contributions through salary sacrifice etc, my taxable income on my final 22/23 payslip was £51,000.54. The additional payment I made was £10000. Income from interest will be below the allowance (£1k?)  and no dividends.

£1000 or £10000? Net or gross.

You have misunderstood how it works with savings. What is the actual amount of interest? This is then added to your £51000 payslip figure to get your taxable income. The 'allowance' is not a tax free allowance as such, it's taxable income with a 0% rate up to £1000 if you are a basic rate taxpyer, £500 if 40%.

Typo. £1k!

I was just pointing out that I don't know how much interest will be but it isn't much. So, possibly looking at £51000 + £100-200 in total. I guess a tiny amount of the child benefit will need to be paid back....

Added complication. My father passed away March last year. After getting probate some of his assets (savings) were transferred into a savings account of mine. It's now been distributed but the interest is in the savings account so that will likely need to be considered too.
 

Dazed_and_C0nfused

smk77 said:

BoGoF said:

smk77 said:

Dazed_and_C0nfused said:

smk77 said:

springboot said:

Yes, making a one-time pension contribution before the tax year ends could lower your taxable income enough to keep you eligible for full child benefit without repayment to HMRC. Contributing £2k, for instance, if your expected taxable income is £52k, could bring it down to £50k, meeting the threshold.

I made the contribution a week ago. I checked my final pay slip for the year a couple of days ago and it looks as though I was 34p off in my calculations! So, my total taxable pay is £50,000.54. I think i'll just add an extra £25 in (minimum amount).

I need to register for self assessment now though?

HICBC doesn't apply until your adjusted net income reaches £50,100.

Have you definitely calculated it correctly?

You need to include all taxable income, even if some is taxed at 0% like interest and dividends can be.

The additional payment I made to my pension was a contribution from my bank account to pension provider rather than through my employer. I'd left it too late to increase via employer. After all my pension contributions through salary sacrifice etc, my taxable income on my final 22/23 payslip was £51,000.54. The additional payment I made was £10000. Income from interest will be below the allowance (£1k?)  and no dividends.

£1000 or £10000? Net or gross.

You have misunderstood how it works with savings. What is the actual amount of interest? This is then added to your £51000 payslip figure to get your taxable income. The 'allowance' is not a tax free allowance as such, it's taxable income with a 0% rate up to £1000 if you are a basic rate taxpyer, £500 if 40%.

Typo. £1k!

I was just pointing out that I don't know how much interest will be but it isn't much. So, possibly looking at £51000 + £100-200 in total. I guess a tiny amount of the child benefit will need to be paid back....

Added complication. My father passed away March last year. After getting probate some of his assets (savings) were transferred into a savings account of mine. It's now been distributed but the interest is in the savings account so that will likely need to be considered too.
 

If you paid £1,000 then that will be a gross contribution of £1,250 with the 25% the pension company adds.

If you paid £800 then it would £1,000 (gross).

That contributions doesn't change your taxable income but it does reduce your adjusted net income.  And increases your basic rate band.

All of which is automatically factored into your Self Assessment calculation if you complete the return correctly.

smk77

Dazed_and_C0nfused said:

smk77 said:

BoGoF said:

smk77 said:

Dazed_and_C0nfused said:

smk77 said:

springboot said:

Yes, making a one-time pension contribution before the tax year ends could lower your taxable income enough to keep you eligible for full child benefit without repayment to HMRC. Contributing £2k, for instance, if your expected taxable income is £52k, could bring it down to £50k, meeting the threshold.

I made the contribution a week ago. I checked my final pay slip for the year a couple of days ago and it looks as though I was 34p off in my calculations! So, my total taxable pay is £50,000.54. I think i'll just add an extra £25 in (minimum amount).

I need to register for self assessment now though?

HICBC doesn't apply until your adjusted net income reaches £50,100.

Have you definitely calculated it correctly?

You need to include all taxable income, even if some is taxed at 0% like interest and dividends can be.

The additional payment I made to my pension was a contribution from my bank account to pension provider rather than through my employer. I'd left it too late to increase via employer. After all my pension contributions through salary sacrifice etc, my taxable income on my final 22/23 payslip was £51,000.54. The additional payment I made was £10000. Income from interest will be below the allowance (£1k?)  and no dividends.

£1000 or £10000? Net or gross.

You have misunderstood how it works with savings. What is the actual amount of interest? This is then added to your £51000 payslip figure to get your taxable income. The 'allowance' is not a tax free allowance as such, it's taxable income with a 0% rate up to £1000 if you are a basic rate taxpyer, £500 if 40%.

Typo. £1k!

I was just pointing out that I don't know how much interest will be but it isn't much. So, possibly looking at £51000 + £100-200 in total. I guess a tiny amount of the child benefit will need to be paid back....

Added complication. My father passed away March last year. After getting probate some of his assets (savings) were transferred into a savings account of mine. It's now been distributed but the interest is in the savings account so that will likely need to be considered too.
 

If you paid £1,000 then that will be a gross contribution of £1,250 with the 25% the pension company adds.

If you paid £800 then it would £1,000 (gross).

That contributions doesn't change your taxable income but it does reduce your adjusted net income.  And increases your basic rate band.

All of which is automatically factored into your Self Assessment calculation if you complete the return correctly.

good point. When I paid the £1000 in, £1250 was added to my pension.