Estimated income for tax code

Gb908910

Good morning
i contribute to my pension via my salary which comes out gross.
i need to update my estimated income in HMRC and wondered what do you put in?
do I put my income gross before any pension deductions or do I put my income after my pension deductions?

Dazed_and_C0nfused

HMRC are interested in your taxable pay, the amount that you expect to see on your P60 next April.

What that will be will depend on the method used to contribute to your pension.  But it should be clear on your payslips really.

Marcon

Gb908910 said:

Good morning
i contribute to my pension via my salary which comes out gross.
i need to update my estimated income in HMRC and wondered what do you put in?
do I put my income gross before any pension deductions or do I put my income after my pension deductions?

Sounds like the 'net pay' method - a really confusing bit of jargon, since the deduction is actually made from gross pay.

Have you discussed the possibility of salary sacrifice with your employer? That way you'd both get an NI saving (you'd get the same tax relief).

Gb908910

My pension is salary sacrifice as it’s taken gross before tax deductions

QrizB

Gb908910 said:

My pension is salary sacrifice as it’s taken gross before tax deductions

That's not salary sacrifice. That's net pay.

Dazed_and_C0nfused

Gb908910 said:

My pension is salary sacrifice as it’s taken gross before tax deductions

You originally said you contributed so it can't be salary sacrifice.

Salary sacrifice is where you agree to a reduced salary and your employer contributed more to your pension.

Gb908910

I pay a .% of my salary into a pension, my employer matches the contribution , this is shown on my payslip in the section before tax.

Dazed_and_C0nfused

Gb908910 said:

I pay a .% of my salary into a pension, my employer matches the contribution , this is shown on my payslip in the section before tax.

That would be net pay method then.

For example salary £50,000 and you pay 10% means your P60 will show your taxable pay as £45,000.

HMRC want to know about the £45,000.  The £50,000 is irrelevant to them.

Albermarle

Gb908910 said:

My pension is salary sacrifice as it’s taken gross before tax deductions

Already explained but I know it can be a bit confusing. To use an example.

Someone earns £4K per month and wants to contribute £500 per month to their pension.

If the employer operates a 'Net Pay' system for pension contributions then your payslip should show a monthly salary of £4,000 and a deduction of £500 before tax is deducted.

If the employer operates a salary sacrifice system , your payslip would just show a salary of £3500.
The employer will pay the £500 direct to the pension provider ( in addition to their normal contribution)
The advantage of this is you ( and they ) do not pay NI on that £500.

If you look at the details of your pension online, with salary sacrifice, you will see one employer payment each month.
If it is net pay, you will payments from the employer and from you.

Cobbler_tone

Albermarle said:

Gb908910 said:

My pension is salary sacrifice as it’s taken gross before tax deductions

Already explained but I know it can be a bit confusing. To use an example.

Someone earns £4K per month and wants to contribute £500 per month to their pension.

If the employer operates a 'Net Pay' system for pension contributions then your payslip should show a monthly salary of £4,000 and a deduction of £500 before tax is deducted.

If the employer operates a salary sacrifice system , your payslip would just show a salary of £3500.
The employer will pay the £500 direct to the pension provider ( in addition to their normal contribution)
The advantage of this is you ( and they ) do not pay NI on that £500.

If you look at the details of your pension online, with salary sacrifice, you will see one employer payment each month.
If it is net pay, you will payments from the employer and from you.

It can be really confusing because we are 100% salary sacrifice but our payslips show exactly what you just described as 'net pay'.
i.e. gross salary and a deduction of chosen pension contributions on a separate line. 
I know my taxable pay and reduced NI is 100% correct because I check it frequently and have a spreadsheet which runs within £1 of my take home based on a pension contribution grid.

Could well be that many payslips will display it differently.

The easiest way of how salary sacrifice 'might' be display as a worked example.

Gb908910

Dazed_and_C0nfused said:

Gb908910 said:

I pay a .% of my salary into a pension, my employer matches the contribution , this is shown on my payslip in the section before tax.

That would be net pay method then.

For example salary £50,000 and you pay 10% means your P60 will show your taxable pay as £45,000.

HMRC want to know about the £45,000.  The £50,000 is irrelevant to them.

Thanks, thought this was the case as when I checked the income hmrc had received from my employer arlready this tax year it was monthly salary after pension deduction.