movilogo wrote: »
Martin advised that even if you earn over £60k, it is still worth claiming CB because
1. You can earn interest on that amount even if you have to return it later.
2. You never know if you lose your job or your income falls. In that case you keep all or part of CB anyway.
Icequeen99 wrote: »
The main part of the case was about a separate compliance issue, and was successfully argued.
I don't think they would be counting the same income twice.
They would essentially be saying that you have given up X pounds of your income to increase your entitlement to tax credits and so under the notional income rules they treat you as having that income (so going down in the calc as notional income). They would then still have to deduct the pension contribution amount in full. But I don't see how that counts the income twice. Have I missed something? It works in the same way as any notional income would.
What you did with the income you gave up becomes somewhat irrelevant to the calculation - whatever amount was given up would go down as notional income (presuming of course HMRC could show you had deprived yourself to gain extra tax credits)
Agreed as well that it probably isn't worth their effort this close to UC.
whitelightning wrote: »
I'm confused about completing the self assessment form. Does everyone who earn over £50k need to fill one in now and which tax year is it based on?
My P60 for 2011-12 was £52k and my P60 for 2012-13 is projected to be well under £50k. Do I need to do anything? Thanks
zagfles wrote: »
As I understand it they would have to, to use the notional income rule for normal (non sacrifice) contributions, because of the way income is totalled in the Tax Credits (Definition and Calculation of Income) Regulations 2002.
Say someone earned £60,000 (employment income), and contributed £50,000 to a pension.
To use the notional income rule, they would have to count £50,000 of notional income in 3(1) Step 1, and £60,000 of employment income in 3(1) Step 2, add these together in Step 3 to come to £110,000.
Then deduct the £50,000 pension contribution later on as per 3(7)(c), giving the original £60,000.
So in step 3, the same income has been added twice. Would this stand up in law?
Yes, but normally notional income would be instead of a different income. For instance if instead of a pension contribution, they decided to sacrifice salary, then employment income is reduced by £50,000, and is replaced by notional income, so you don't count the same income twice in Step 3.
I would have thought they'd have clamped down on this long ago if they were going to - the potential for abuse was much greater 5 years ago in the days of the £25,000 disregard for income rises and no disregard for falls. As I'm sure you're aware it was possible to get pension conts almost free, by contributing up to £25k every other year. Some accountants were advising clients to do this.
zagfles wrote: »
If you earn under £50k this year then you should be OK, but they might ask you to do a tax return. If you go over £50k you will have to do a tax return whether they ask or not. (unless you give up child ben)
Two MoneySavers reclaim £1,000
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