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Posted Sun, 22 Sep 2024 07:30:46 GMT by lolidad
Hello, Assuming salary as only source of income, is the below calculation for tapered allowance for 2023-24 correct please. Inputs: * Salary from P60 (total income on which tax is due): 225,000 * Employer pension contribution: 27,000 * Employee salary sacrifice to pension: 14,000 Calc: Threshold income = 225k Adjusted income = 225k + 14k + 27k = 266k Pension allowance = 60k - 6k/2 = 57k Cheers
Posted Fri, 27 Sep 2024 08:03:55 GMT by HMRC Admin 19 Response
Hi,
Unfortunately we can not comment on individual circumstances. You will need to contact us by webchat or via phone, see link: 
Self Assessment: general enquiries
Thank you.
Posted Fri, 27 Sep 2024 11:39:44 GMT by lolidad
Thank you for replying. To clarify, this is a hypothetical example aiming to understand how the salary sacrifice is handled in Threshold and Adjusted Income calculation - this is why I assumed there is no other source of income. As the HMRC help pages do not have a worked example for above case, I thought it will be useful to clarify. I will do my actual calculation with consideration to my full circumstances. Appreciate your help with this, please do feel free to add any caveats in your reply.
Posted Sun, 12 Jan 2025 16:58:57 GMT by GUY101
Hi, continuing from lolidad's post, I wish to report the two methods I found on 5 different websites for calculating the net adjusted income from the P60: if for example I have 140k written on my P60, and the accumulated pension contributions (shown in my P11 in March) are: 20k (employee through sacrificial salary) and 10k (from my employer, including NIC), which one of these methods is right? Method 1: * Start with P60 * Add my 20k sacrificial salary to restore my total earnings * Add the total pension contribution of my employer: 10k + 20k (this latter 20k is again my sacrificial salary, because it has become a part of my employer contribution) So adjusted income: 190k Method 2: * Start with P60 * Add my 20k sacrificial salary to restore my total earnings * Add the pension contribution of my employer (discounting my sacrificial salary): 10k So adjusted income: 170k I fully understand the HMRC cannot be liable for individual circumstances, and also I did not include any additional income, so this is only an academic case to learn the rules in this very simple example. I assume no other income. Could you be so kind telling me which method is correct? Thank you for your reply.
Posted Fri, 31 Jan 2025 17:34:26 GMT by HMRC Admin 20 Response
Hi GUY101,
You work out the adjusted net income figure by deducting certain figures from their net income, we call the figure we then have their adjusted net income.

add together the total income liable to income tax
This includes:
income from employment before tax
profits from self employment
employment benefits (for example medical benefit, car benefit)
pensions including State Pension
income from property
gross savings and dividends

deduct any allowable reliefs
This includes:
Professional Subscriptions
Flat Rate Expenses
Job Expenses
Payments to pension schemes that have been made without deduction of tax (a gross payment)
Trading losses (early trade loss, trade loss relief against general income, property loss relief against general income)
Qualifying loan interest payments
deduct any grossed up:
Gift Aid donations
pension contributions.

Do not deduct any pension payments made under net pay arrangements, these are deducted from salary before the employer provides PAYE and are therefore ignored for the purposes of calculating adjusted net income
Add any relief claimed for payments to trade unions or police organisations.

Thank you.

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