Pensions and salary sacrifice

dr_bogenbroom

Hello,

I will have just tipped over above the 50k tax bracket this tax year to about 51.2k due to a bonus. My wife only earns around 5.5k a year and is in receipt of child benefit for our son. 

I pay a salary sacrifice pension of around 2.9k a year. Do the HMRC automatically take this pension payment into account to reduce bring me back below 50k so we don’t lose any of the child benefit?

I could be completely wrong in my understanding of the above!

Thanks.

Dazed_and_C0nfused

dr_bogenbroom said:

Hello,

I will have just tipped over above the 50k tax bracket this tax year to about 51.2k due to a bonus. My wife only earns around 5.5k a year and is in receipt of child benefit for our son. 

I pay a salary sacrifice pension of around 2.9k a year. Do the HMRC automatically take this pension payment into account to reduce bring me back below 50k so we don’t lose any of the child benefit?

I could be completely wrong in my understanding of the above!

Thanks.

HMRC are unlikely to know about salary sacrifice as what that actually means is you are agreeing to a reduced salary.  And in return you employer adds more to your pension.

You do not get any pension tax relief on employer contributions and cannot deduct them when working out your adjusted net income, which is what HICBC is based on.

What do you expect your P60 to show your taxable pay as for 2024-25?

Are you aware that for the 2024-25 tax year the lower threshold for HICBC changed from £50,100 to £60,200?

dr_bogenbroom

Ok no I didn’t know it had increased so that solves that problem. I think I understand it now! Thanks.

cosyc

Has your wife transferred part of her allowance to you that also increases the HR band 
https://www.gov.uk/marriage-allowance

Dazed_and_C0nfused

cosyc said:

Has your wife transferred part of her allowance to you that also increases the HR band 
https://www.gov.uk/marriage-allowance

Marriage Allowance has no impact on the recipient's Personal Allowance or their basic rate band.

It is a tax reducer worth upto £252.