AET for Light Touch £1437 net or gross

Yamor

alchemist777 said:

it seems that the problem lies with 'NET pay arrangements pensions'' because pension contributions are removed before tax and NI contributions. If your gross pay is £935 (below the taxable threshold anyway) and the £50 pension contribution is deducted under a 'net pay arrangement', the RTI report shows the figure of £885 (£935-£50). The key point is how the DWP interprets the Administrative Earnings Threshold (AET) earnings.If the pension was removed after tax, the earnings reported would still be £935.

The AET is based on gross taxable earnings as reported by the Real-Time Information (RTI) system. This means that your gross earnings before any tax or National Insurance (NI) contributions are used to assess whether you're above or below the threshold. However, under a net pay arrangement, your pension contribution is deducted before tax, which means your gross taxable earnings are £885 (£935 - £50). This figure is what the RTI reports to the DWP.


This needs to be challenged.

Thank you for this post, and your earlier post.
Can I ask again: your previous post looked like a quote from somewhere. Can you say where from?

And on this last post, how do you know for certain that UC use gross taxable earnings figure for AET purposes (and presumably CET purposes as well), and don't add back in the pension deduction (which we know they do receive information about)?

the_pink_panther_2

alchemist777 said:

it seems that the problem lies with 'NET pay arrangements pensions'' because pension contributions are removed before tax and NI contributions. If your gross pay is £935 (below the taxable threshold anyway) and the £50 pension contribution is deducted under a 'net pay arrangement', the RTI report shows the figure of £885 (£935-£50). The key point is how the DWP interprets the Administrative Earnings Threshold (AET) earnings.If the pension was removed after tax, the earnings reported would still be £935.

The AET is based on gross taxable earnings as reported by the Real-Time Information (RTI) system. This means that your gross earnings before any tax or National Insurance (NI) contributions are used to assess whether you're above or below the threshold. However, under a net pay arrangement, your pension contribution is deducted before tax, which means your gross taxable earnings are £885 (£935 - £50). This figure is what the RTI reports to the DWP.


This needs to be challenged.

So what would happen if someone earned enough (before pension contributions deducted) to pay tax and NI.  The NI is based on the gross earnings though, so for instance, £15000/year paying £6000/year net pay arrangement.  Take home would be £733.80 but £16.20 NI would have been paid but no tax, so by this definition, of gross taxable earnings, would the gross taxable earnings be £733.80, or £733.80 + £16.20 = £750. The legislation itself as I understand it seems clear, that it is gross earnings for AET, so in this case, £15000/12  = £1250  I do understand that it would be tricky for DWP employees to sympathetic to the plight of anyone caught up in this, but there are people with genuine circumstances.   

huckster

If people are really bothered by this, then contacting MP to raise a question with DWP would appear best way. Then officials at DWP can look into AET and how different payroll arrangements impact.

Raising an issue with UC or Job Centre is unlikely to achieve anything as DWP staff will just follow what the system processes tell them.

alchemist777

@Yamor I asked AI...you can ask any question to get clarification, including legislation

vex13

Yamor said:

Thank you for this post, and your earlier post.

Can I ask again: your previous post looked like a quote from somewhere. Can you say where from?

And on this last post, how do you know for certain that UC use gross taxable earnings figure for AET purposes (and presumably CET purposes as well), and don't add back in the pension deduction (which we know they do receive information about)?

Not sure how Alchemist knows but the system using gross taxable earnings was also the explanation we were given by the jobcentre, after they tried questioning this for us. 

Spoonie_Turtle

alchemist777 said:

I asked AI...you can ask any question to get clarification, including legislation

You can ask, but there's absolutely no guarantee it'll be correct.  The AI models just scrape the internet for information, with zero checks done to confirm the accuracy of any of it. 

In a way it's worse than a human misinterpreting official information because at least a human can be asked to post their sources, and can be corrected.

alchemist777

I spent some time reading through various threats here, then went to do my research. Work-related groups are based on RTI reports. The bottom line is that AET is based on gross income. Because 'net payment arrangement pensions are removed from salary before tax/NI, the RTI reports this 'new gross salary'' without the pension contributions. This can tip some people below the AET threshold. I challenged this in my journal and requested to discuss this over the phone rather than in person interview it; was agreed upon. I will let you know the outcome.
The £892 AET is set below the tax threshold anyway, so people should not be put into intense work search groups based on pension contributions.All they need to see is a payslip for clarification.('Net pay arrangement' pension isn't a salary sacrifice )

alchemist777

@ Spoonie -AI gives very useful information with links to further reading. It all depends on what you ask for. If you want legislation, it will give you precise legislation, which you can then read yourself -it saves time and clarifies even the legislation itself if required. I've learnt incredible things via AI- a brilliant tool.

michaels

alchemist777 said:

I spent some time reading through various threats here, then went to do my research. Work-related groups are based on RTI reports. The bottom line is that AET is based on gross income. Because 'net payment arrangement pensions are removed from salary before tax/NI, the RTI reports this 'new gross salary'' without the pension contributions. This can tip some people below the AET threshold. I challenged this in my journal and requested to discuss this over the phone rather than in person interview it; was agreed upon. I will let you know the outcome.
The £892 AET is set below the tax threshold anyway, so people should not be put into intense work search groups based on pension contributions.All they need to see is a payslip for clarification.('Net pay arrangement' pension isn't a salary sacrifice )

That is not quite correct, net pay is removed before tax but after NI.  No idea what information the RTI shares.

the_pink_panther_2

michaels said:

alchemist777 said:

I spent some time reading through various threats here, then went to do my research. Work-related groups are based on RTI reports. The bottom line is that AET is based on gross income. Because 'net payment arrangement pensions are removed from salary before tax/NI, the RTI reports this 'new gross salary'' without the pension contributions. This can tip some people below the AET threshold. I challenged this in my journal and requested to discuss this over the phone rather than in person interview it; was agreed upon. I will let you know the outcome.
The £892 AET is set below the tax threshold anyway, so people should not be put into intense work search groups based on pension contributions.All they need to see is a payslip for clarification.('Net pay arrangement' pension isn't a salary sacrifice )

That is not quite correct, net pay is removed before tax but after NI.  No idea what information the RTI shares.

Exactly, so it looks like they incorrectly use a figure net of pension (if net pay arrangement), but I'm unclear then if it's net or gross of NI... But as huckster said, short of getting an MP involved, which I imagine could be lengthy,  what can be done to resolve it?