Adjusted Net income

chrisbur

Endeavour23 said:

chrisbur said:

Endeavour23 said:

Inbetweeners said:

Endeavour23 said:

Dazed_and_C0nfused said:

Endeavour23 said:

My current tax year amounts will be very similar to the 22/23 amounts. Not sure how is best to calculate current tax year when the year is still ‘live’ 

The exact same way you would for any other tax year.

You might just need to estimate some elements.

But if for example you have a bank account with £X in and you know the interest will be paid on say 31 March 2025 you should be able to work out a decent estimate of the interest

OK so I have gone through month by month and done the following:
Apr24- Aug 24- used actual payslips for taxable income
Sept 24- Mar 25 - estimated taxable income based on previous months (I have not included anything for a 'potential' pay rise in October as this is all unknown at present) but I have included a bonus amount which I know of.
Doing the above gives me a taxable income of £101,984.99

I have no other taxable incomes to include (no dividends, no rental income, no interest on savings)

I only have a pension where by my employer takes workplace pension contributions out of my pay before deducting Income Tax so the pension contributions are included in the above amount as show on payslip pre tax.

Gift Aid- I have made some but I have no records (will keep these going forward!)

Pension contributions
- My contributions made I estimate will total £4,752.12 for the year

Therefore on the above I estimate my ANI  to be £97,232.87

Have I missed anything or am I totally incorrect here!

Your post is confusing. On the one hand you say your pension contributions come off pre tax so that being the case your taxable pay should be after the pension contributions have been deducted, i.e. £101,984. Then you want to deduct the pension contributions from your taxable pay?

Can you post a redacted payslip so we can see what the actual position is.

As an aside, someone in your position should be paying a lot more than that towards your pension.

I was just following the guidance from the HMRC as per the following I thought:

payments made gross to pension schemes - those that have been made without tax relief

So my pension contribution on my payslip is shown on the taxable gross side before deductions for tax are made.

If your payslip has just one gross figure then your pension is being taken from your net pay (relief at source) 
If your payslip has two gross figures one for gross and one ( a lower figure if just pension involved ) marked taxable gross then your pension is being taken before tax is calculated, ie the lower taxable gross figure is used (net pay arrangement) 
 

On my payslip there is only one Pension amount shown which I believe is included in the taxable gross amount f my total payslip. If this is the case do I then deduct this or not as the HMRC guidance is very confusing IMO- as per the below it implies you would take off payments made gross to pension schemes.

The question is are there two gross figures not two pension figures.  
If there are two gross figures on your payslip and one is lower than the other by the amount of your pension then that will be shown as taxable gross.
For example you might have a gross figure of £500
You pay £50 into your pension
Your payslip will show a Taxable gross of £450

Endeavour23

chrisbur said:

Endeavour23 said:

chrisbur said:

Endeavour23 said:

Inbetweeners said:

Endeavour23 said:

Dazed_and_C0nfused said:

Endeavour23 said:

My current tax year amounts will be very similar to the 22/23 amounts. Not sure how is best to calculate current tax year when the year is still ‘live’ 

The exact same way you would for any other tax year.

You might just need to estimate some elements.

But if for example you have a bank account with £X in and you know the interest will be paid on say 31 March 2025 you should be able to work out a decent estimate of the interest

OK so I have gone through month by month and done the following:
Apr24- Aug 24- used actual payslips for taxable income
Sept 24- Mar 25 - estimated taxable income based on previous months (I have not included anything for a 'potential' pay rise in October as this is all unknown at present) but I have included a bonus amount which I know of.
Doing the above gives me a taxable income of £101,984.99

I have no other taxable incomes to include (no dividends, no rental income, no interest on savings)

I only have a pension where by my employer takes workplace pension contributions out of my pay before deducting Income Tax so the pension contributions are included in the above amount as show on payslip pre tax.

Gift Aid- I have made some but I have no records (will keep these going forward!)

Pension contributions
- My contributions made I estimate will total £4,752.12 for the year

Therefore on the above I estimate my ANI  to be £97,232.87

Have I missed anything or am I totally incorrect here!

Your post is confusing. On the one hand you say your pension contributions come off pre tax so that being the case your taxable pay should be after the pension contributions have been deducted, i.e. £101,984. Then you want to deduct the pension contributions from your taxable pay?

Can you post a redacted payslip so we can see what the actual position is.

As an aside, someone in your position should be paying a lot more than that towards your pension.

I was just following the guidance from the HMRC as per the following I thought:

payments made gross to pension schemes - those that have been made without tax relief

So my pension contribution on my payslip is shown on the taxable gross side before deductions for tax are made.

If your payslip has just one gross figure then your pension is being taken from your net pay (relief at source) 
If your payslip has two gross figures one for gross and one ( a lower figure if just pension involved ) marked taxable gross then your pension is being taken before tax is calculated, ie the lower taxable gross figure is used (net pay arrangement) 
 

On my payslip there is only one Pension amount shown which I believe is included in the taxable gross amount f my total payslip. If this is the case do I then deduct this or not as the HMRC guidance is very confusing IMO- as per the below it implies you would take off payments made gross to pension schemes.

The question is are there two gross figures not two pension figures.  
If there are two gross figures on your payslip and one is lower than the other by the amount of your pension then that will be shown as taxable gross.
For example you might have a gross figure of £500
You pay £50 into your pension
Your payslip will show a Taxable gross of £450

Sorry, summer holidays has really taken its toll on my brain!!!

So my payslip shows:
EEs pension amount xxx
Notional salary amount xxxx
Actual salary amount xxxx

So to confirm I have 2 gross figures on my payslip one which is lower then the amount of my pension payment for the month.

so does this then mean the pension amount has already been removed and shouldn't be removed again for the purposes of the adjusted net income calculation? 

Endeavour23

And this would be considered as salary sacrifice which am I correct in thinking cannot be taken as tax relief and cannot be taken off the calc for ANI?

Inbetweeners

Endeavour23 said:

And this would be considered as salary sacrifice which am I correct in thinking cannot be taken as tax relief and cannot be taken off the calc for ANI?

No, it's not salary sacrifice but it sounds like net pay scheme and this being the case you cannot deduct your pension contributions from your taxable pay as your taxable pay has already been reduced by them.

Endeavour23

ok and so the below will also not come into play at all?

Step 3 - take off pension contributions

If you made a contribution to a pension scheme where your pension provider has already given you tax relief at basic rate, take off the ‘grossed-up’ amount - what you paid plus the basic rate of tax.

So, for every £1 of pension contribution you made, take £1.25 from your ‘net income’.

Inbetweeners

Endeavour23 said:

ok and so the below will also not come into play at all?

Step 3 - take off pension contributions

If you made a contribution to a pension scheme where your pension provider has already given you tax relief at basic rate, take off the ‘grossed-up’ amount - what you paid plus the basic rate of tax.

So, for every £1 of pension contribution you made, take £1.25 from your ‘net income’.

Only if you take out a personal pension and pay into it.

Not sure why it's a difficult concept to grasp that you can't deduct the same figure from your income twice, which is what you are seeking to do.

Think of it as what would your taxable income be now if you hadn't made the pension contributiions via salary vs what your taxable income is now.

sheramber

Endeavour23 said:

chrisbur said:

Endeavour23 said:

chrisbur said:

Endeavour23 said:

Inbetweeners said:

Endeavour23 said:

Dazed_and_C0nfused said:

Endeavour23 said:

My current tax year amounts will be very similar to the 22/23 amounts. Not sure how is best to calculate current tax year when the year is still ‘live’ 

The exact same way you would for any other tax year.

You might just need to estimate some elements.

But if for example you have a bank account with £X in and you know the interest will be paid on say 31 March 2025 you should be able to work out a decent estimate of the interest

OK so I have gone through month by month and done the following:
Apr24- Aug 24- used actual payslips for taxable income
Sept 24- Mar 25 - estimated taxable income based on previous months (I have not included anything for a 'potential' pay rise in October as this is all unknown at present) but I have included a bonus amount which I know of.
Doing the above gives me a taxable income of £101,984.99

I have no other taxable incomes to include (no dividends, no rental income, no interest on savings)

I only have a pension where by my employer takes workplace pension contributions out of my pay before deducting Income Tax so the pension contributions are included in the above amount as show on payslip pre tax.

Gift Aid- I have made some but I have no records (will keep these going forward!)

Pension contributions
- My contributions made I estimate will total £4,752.12 for the year

Therefore on the above I estimate my ANI  to be £97,232.87

Have I missed anything or am I totally incorrect here!

Your post is confusing. On the one hand you say your pension contributions come off pre tax so that being the case your taxable pay should be after the pension contributions have been deducted, i.e. £101,984. Then you want to deduct the pension contributions from your taxable pay?

Can you post a redacted payslip so we can see what the actual position is.

As an aside, someone in your position should be paying a lot more than that towards your pension.

I was just following the guidance from the HMRC as per the following I thought:

payments made gross to pension schemes - those that have been made without tax relief

So my pension contribution on my payslip is shown on the taxable gross side before deductions for tax are made.

If your payslip has just one gross figure then your pension is being taken from your net pay (relief at source) 
If your payslip has two gross figures one for gross and one ( a lower figure if just pension involved ) marked taxable gross then your pension is being taken before tax is calculated, ie the lower taxable gross figure is used (net pay arrangement) 
 

On my payslip there is only one Pension amount shown which I believe is included in the taxable gross amount f my total payslip. If this is the case do I then deduct this or not as the HMRC guidance is very confusing IMO- as per the below it implies you would take off payments made gross to pension schemes.

The question is are there two gross figures not two pension figures.  
If there are two gross figures on your payslip and one is lower than the other by the amount of your pension then that will be shown as taxable gross.
For example you might have a gross figure of £500
You pay £50 into your pension
Your payslip will show a Taxable gross of £450

Sorry, summer holidays has really taken its toll on my brain!!!

So my payslip shows:
EEs pension amount xxx
Notional salary amount xxxx
Actual salary amount xxxx

So to confirm I have 2 gross figures on my payslip one which is lower then the amount of my pension payment for the month.

so does this then mean the pension amount has already been removed and shouldn't be removed again for the purposes of the adjusted net income calculation? 

If you fill in the XXXs it would be easier to explain.

Dazed_and_C0nfused

Endeavour23 said:

ok and so the below will also not come into play at all?

Step 3 - take off pension contributions

If you made a contribution to a pension scheme where your pension provider has already given you tax relief at basic rate, take off the ‘grossed-up’ amount - what you paid plus the basic rate of tax.

So, for every £1 of pension contribution you made, take £1.25 from your ‘net income’.

That relates to "relief at source" (RAS)  contributions where you pay the net contribution and the pension company adds basic rate relief (25% of your net contribution).

Absolutely nothing you have posted so far suggests you have made any RAS contributions though.

And as others have tried explaining you appear to be wanting to double count your pension contributions.