Adjusted net come to help with childcare

Northeastlass01

Hi, I’m looking for some advice please. My husband has just been offered a two year secondment which will include a pay rise. It would be 109k a year, which is amazing, however I realise this would push us over the 100k limit to receive funding for childcare. 

We might need a second car as this new post is further away, so if we took out a lease scheme car (salary sacrifice) through his work, would that be included in calculating the adjustment net income? Also does he deduct how much he pays into his pension from the 109k too? Please could anyone explain this is the most basic terms as i am absolutely clueless in it all!!

I think if we lose the funding, we will be worse off each month despite the pay rise. 

Thanks 

Nomunnofun1

Northeastlass01 said:

Hi, I’m looking for some advice please. My husband has just been offered a two year secondment which will include a pay rise. It would be 109k a year, which is amazing, however I realise this would push us over the 100k limit to receive funding for childcare. 

We might need a second car as this new post is further away, so if we took out a lease scheme car (salary sacrifice) through his work, would that be included in calculating the adjustment net income? Also does he deduct how much he pays into his pension from the 109k too? Please could anyone explain this is the most basic terms as i am absolutely clueless in it all!!

I think if we lose the funding, we will be worse off each month despite the pay rise. 

Thanks 

I will do my best!

The resident expert on adjusted net income will no doubt be here later. 

In the meantime - how will his pension be paid? Salary sacrifice, deductions from gross or net pay? And how much? 

It is imperative that we know this. 

sheramber

Be aware there may be a BIK charge depending on what car you lease.

Northeastlass01

Nomunnofun1 said:

Northeastlass01 said:

Hi, I’m looking for some advice please. My husband has just been offered a two year secondment which will include a pay rise. It would be 109k a year, which is amazing, however I realise this would push us over the 100k limit to receive funding for childcare. 

We might need a second car as this new post is further away, so if we took out a lease scheme car (salary sacrifice) through his work, would that be included in calculating the adjustment net income? Also does he deduct how much he pays into his pension from the 109k too? Please could anyone explain this is the most basic terms as i am absolutely clueless in it all!!

I think if we lose the funding, we will be worse off each month despite the pay rise. 

Thanks 

I will do my best!

The resident expert on adjusted net income will no doubt be here later. 

In the meantime - how will his pension be paid? Salary sacrifice, deductions from gross or net pay? And how much? 

It is imperative that we know this. 

Hi

thanks for your reply. 

His pension will be paid from gross pay. 

Not sure how much in £ but the employee contribution I think is 12.5%, and the employer is 23.7% 

His new salary would be £105,385 just found out the correct amount. 

Thanks for your help

Northeastlass01

sheramber said:

Be aware there may be a BIK charge depending on what car you lease.

Thank you for you reply. Would that be if it was a bonus type work car on top of his wage? As this would be where we pay for it out of his wage as a salary sacrifice.BIK is one of the things I don’t really understand too 

thanks for your help

sheramber

Northeastlass01 said:

sheramber said:

Be aware there may be a BIK charge depending on what car you lease.

Thank you for you reply. Would that be if it was a bonus type work car on top of his wage? As this would be where we pay for it out of his wage as a salary sacrifice.BIK is one of the things I don’t really understand too 

yes, because it is a benefit from your employer

What the BIK charge is depends on the car chosen.

https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye

Nomunnofun1

Northeastlass01 said:

Nomunnofun1 said:

Northeastlass01 said:

Hi, I’m looking for some advice please. My husband has just been offered a two year secondment which will include a pay rise. It would be 109k a year, which is amazing, however I realise this would push us over the 100k limit to receive funding for childcare. 

We might need a second car as this new post is further away, so if we took out a lease scheme car (salary sacrifice) through his work, would that be included in calculating the adjustment net income? Also does he deduct how much he pays into his pension from the 109k too? Please could anyone explain this is the most basic terms as i am absolutely clueless in it all!!

I think if we lose the funding, we will be worse off each month despite the pay rise. 

Thanks 

I will do my best!

The resident expert on adjusted net income will no doubt be here later. 

In the meantime - how will his pension be paid? Salary sacrifice, deductions from gross or net pay? And how much? 

It is imperative that we know this. 

Hi

thanks for your reply. 

His pension will be paid from gross pay. 

Not sure how much in £ but the employee contribution I think is 12.5%, and the employer is 23.7% 

His new salary would be £105,385 just found out the correct amount. 

Thanks for your help

So - it’s £105385 before pension contributions are deducted. Not withstanding the potential BIK, that’s a taxable salary of £92211. Can this be clarified?

KidJo

I'm a little confused with all the numbers flying around here, so lets try to lay this out (with some assumptions):
Gross salary £109,000
Less: Salary sacrifice for the car -£3,615
Less: -£13,174 (I assume thats either a salary sacrifice or a net pay arrangement because you say "that’s a taxable salary of £92211 - let us know if this assumption is wrong)
Add: BIK
Taxable income £92,211 + BIK


Even though you have sacrificed salary for the car (£3,615) you will still need to add on the BIK as part of taxable income. Depending on the car you get you may go back over £100k.

A small pension contribution to a SIPP or a small charitable donation could keep you under the threshold.

Just watch out for any other bits of income that could breach the threshold like savings interest.