How to calculate Adjusted Net Income

cs0rpc

Hi there,

I am trying to calculate my adjusted net income to understand if I am eligible for government funded childcare.

My wife earns comfortably beneath the current threshold, but I am borderline.  My earnings are broken down between:

1. basic pay
2. bonus
3. income from renting a flat
4. ISA interest

I don't want to provide the specifics, but I would be greatful to anyone who can help with the following questions and assumptions

1. Rental income should actually be rental profit (i.e. less expenses that are tax deductible)
2. Whilst a tax credit is given for mortgage interest, the interest is not deductible in itself from the rental profit?
3. Similarly, any mortgage product or solicitor fees would not be deductable from the rental profit?
4. ISA interest counts towards adjusted net income?
5. Pensions - this is an area I'm unclear on

I sacrifice a percentage of my pay into my pension, which my employer matches.

Does this have any net effect on my calculation?

Thanks!

Dazed_and_C0nfused

Already answered on your duplicate thread.

cs0rpc

Thanks - have had a search on the forum.  I want to be crystal clear on this as don't want to make any mistakes, so please can someone confirm my interpretation:

1. Rental income should actually be rental profit (i.e. less expenses that are tax deductible)
2. Whilst a tax credit is given for mortgage interest, the interest is not deductible in itself from the rental profit
3. Similarly, any mortgage product or solicitor fees would not be deductable from the rental profit
4. ISA interest DOES NOT counts towards adjusted net income as not taxable
5. Pensions - any salary sacrifice effectively reduces adjust net income as is salary is reduced, but any matched employer contributions have no not effect

Please can someone confirm this is correct?

Dazed_and_C0nfused

cs0rpc said:

Thanks - have had a search on the forum.  I want to be crystal clear on this as don't want to make any mistakes, so please can someone confirm my interpretation:

1. Rental income should actually be rental profit (i.e. less expenses that are tax deductible)
2. Whilst a tax credit is given for mortgage interest, the interest is not deductible in itself from the rental profit
3. Similarly, any mortgage product or solicitor fees would not be deductable from the rental profit
4. ISA interest DOES NOT counts towards adjusted net income as not taxable
5. Pensions - any salary sacrifice effectively reduces adjust net income as is salary is reduced, but any matched employer contributions have no not effect

Please can someone confirm this is correct?

Most of it has been answered on your other thread.

But for the avoidance of doubt you can never deduct salary sacrifice pension contributions as they are employer contributions.  You do not get any pension tax relief on those either as you haven't paid them.

Bit you do have less salary on your P60 as a result of the sacrifice.

Pension contributions paid by your employer are never of any tax benefit to you.