Help with pension contributions and child benefit

Fphelp123

Hi I have been reading lots of good info on this forum but still need a bit of help. 

So I have switched to a relief at source pension and will be earning approximately 80,000 and making approximately 22,000 in pension contributions per annum. I have notified HMRC via online form as I can’t get through on the phone but wanted to check what else I need to do. 

I currently get child benefit for 4 children so increased my pension contributions to boost my pension and still get the child benefit. It was easy when I had a salary sacrifice scheme but am confused now about what I need to do. 

Will I still be entitled to child benefit as my adjusted net income will be below 60,000? Total is 58,000 plus about 400 pounds in savings interest, no other income of any kind and partner has a low part time income. 

Do I have to now also fill in a self assessment or will I in future in this same situation even though I have notified HMRC of my pension contributions? I would have no reason to complete one other than this. 

My online tax account is showing HMRC plan to give me a tax code next year that deducts my child benefit payments from my tax, but it hasn’t updated since I told them about my relief at source pension so will it update again?  

I think my taxable income is 80,000 but my adjusted net income is 58,400 so I am unsure what I should put on my income estimate on my HMRC online tax account? If I put the 80,000 figure will that mean they will assume I owe the full child benefit back even though I have notified them of my pension contributions? 

As I said I had always previously had salary sacrifice or net pay arrangements for pension which kept my income below the child benefit threshold apart from 2 years where I had high pension contributions and couldn’t keep it below with the lower annual allowance of 40,000 a few years back but I’m well within 60,000 annual allowance now. 

Sorry for the very long post but any help really appreciated as I like to make sure I’m doing things right as I have had a high back tax bill once that was no fun but my own fault for not being on the ball. 

Dazed_and_C0nfused

Fphelp123 said:

Hi I have been reading lots of good info on this forum but still need a bit of help. 

So I have switched to a relief at source pension and will be earning approximately 80,000 and making approximately 22,000 in pension contributions per annum. I have notified HMRC via online form as I can’t get through on the phone but wanted to check what else I need to do. 

I currently get child benefit for 4 children so increased my pension contributions to boost my pension and still get the child benefit. It was easy when I had a salary sacrifice scheme but am confused now about what I need to do. 

Will I still be entitled to child benefit as my adjusted net income will be below 60,000? Total is 58,000 plus about 400 pounds in savings interest, no other income of any kind and partner has a low part time income. 

Do I have to now also fill in a self assessment or will I in future in this same situation even though I have notified HMRC of my pension contributions? I would have no reason to complete one other than this. 

My online tax account is showing HMRC plan to give me a tax code next year that deducts my child benefit payments from my tax, but it hasn’t updated since I told them about my relief at source pension so will it update again?  

I think my taxable income is 80,000 but my adjusted net income is 58,400 so I am unsure what I should put on my income estimate on my HMRC online tax account? If I put the 80,000 figure will that mean they will assume I owe the full child benefit back even though I have notified them of my pension contributions? 

As I said I had always previously had salary sacrifice or net pay arrangements for pension which kept my income below the child benefit threshold apart from 2 years where I had high pension contributions and couldn’t keep it below with the lower annual allowance of 40,000 a few years back but I’m well within 60,000 annual allowance now. 

Sorry for the very long post but any help really appreciated as I like to make sure I’m doing things right as I have had a high back tax bill once that was no fun but my own fault for not being on the ball. 

From what you have posted your earnings are £80k, relief at source pension contributions do not change that.  So your estimated earnings should remain £80k (until something does actually change that estimate).

But your adjusted net income (ANI) is reduced by the gross relief at source (RAS) pension contributions. And ANI is what determines any High Income Child Benefit Charge.

If your ANI is less than £60,200 then there won't be a HICBC so once HMRC take into account the RAS pension contributions you should get a revised tax code to include some provisional higher rate relief for the pension contributions and remove the provisional HICBC entry.

You may find completing a tax return, assuming one is issued, the simplest way to retain control of the actual figures each year.

If you don't want to do that then you may be able to stop filing after doing your 2024-25 return if you clearly no longer meet the Self Assessment criteria.

molerat

Just for clarity, how much are you actually paying in to the pension - £22000 or £17600 with £4400 tax relief being claimed by the provider ?

Fphelp123

molerat said:

Just for clarity, how much are you actually paying in to the pension - £22000 or £17600 with £4400 tax relief being claimed by the provider ?

I’m paying in £17600 with the rest being added as relief at source, does that change my adjusted net income differently? 

Fphelp123

Dazed_and_C0nfused said:

Fphelp123 said:

Hi I have been reading lots of good info on this forum but still need a bit of help. 

So I have switched to a relief at source pension and will be earning approximately 80,000 and making approximately 22,000 in pension contributions per annum. I have notified HMRC via online form as I can’t get through on the phone but wanted to check what else I need to do. 

I currently get child benefit for 4 children so increased my pension contributions to boost my pension and still get the child benefit. It was easy when I had a salary sacrifice scheme but am confused now about what I need to do. 

Will I still be entitled to child benefit as my adjusted net income will be below 60,000? Total is 58,000 plus about 400 pounds in savings interest, no other income of any kind and partner has a low part time income. 

Do I have to now also fill in a self assessment or will I in future in this same situation even though I have notified HMRC of my pension contributions? I would have no reason to complete one other than this. 

My online tax account is showing HMRC plan to give me a tax code next year that deducts my child benefit payments from my tax, but it hasn’t updated since I told them about my relief at source pension so will it update again?  

I think my taxable income is 80,000 but my adjusted net income is 58,400 so I am unsure what I should put on my income estimate on my HMRC online tax account? If I put the 80,000 figure will that mean they will assume I owe the full child benefit back even though I have notified them of my pension contributions? 

As I said I had always previously had salary sacrifice or net pay arrangements for pension which kept my income below the child benefit threshold apart from 2 years where I had high pension contributions and couldn’t keep it below with the lower annual allowance of 40,000 a few years back but I’m well within 60,000 annual allowance now. 

Sorry for the very long post but any help really appreciated as I like to make sure I’m doing things right as I have had a high back tax bill once that was no fun but my own fault for not being on the ball. 

From what you have posted your earnings are £80k, relief at source pension contributions do not change that.  So your estimated earnings should remain £80k (until something does actually change that estimate).

But your adjusted net income (ANI) is reduced by the gross relief at source (RAS) pension contributions. And ANI is what determines any High Income Child Benefit Charge.

If your ANI is less than £60,200 then there won't be a HICBC so once HMRC take into account the RAS pension contributions you should get a revised tax code to include some provisional higher rate relief for the pension contributions and remove the provisional HICBC entry.

You may find completing a tax return, assuming one is issued, the simplest way to retain control of the actual figures each year.

If you don't want to do that then you may be able to stop filing after doing your 2024-25 return if you clearly no longer meet the Self Assessment criteria.

I haven’t been filling in a self assessment form for a few years now so am trying to get it sorted through my tax code as I would much prefer getting the extra tax relief on a regular basis rather than after completing a tax return, I think the HMRC website also said to do it like that if you don’t do self assessment 

Nomunnofun1

Fphelp123 said:

molerat said:

Just for clarity, how much are you actually paying in to the pension - £22000 or £17600 with £4400 tax relief being claimed by the provider ?

I’m paying in £17600 with the rest being added as relief at source, does that change my adjusted net income differently? 

It means that your ANI is reduced by £22000. As molerat stated, this did need clarification!