Adjusted net income for tax free childcare eligibility

Hello, Could you please tell me whether my interpretation of my adjusted net income is correct for entitlement to tax free childcare (below ￡100,000 threshold)? My total income is ￡118,685. My employer (NHS) takes off ￡14,345 pension contributions before tax I have ￡2130 employment expenses (trade union, professional subscriptions, uniform and equipment) I am making ￡2,000 charity payment (grossed up ￡2500) I believe this gives me an adjusted net income of ￡99,710 (118,685 - 14,345 - 2130 - 2500) a) Is the above correct? b) Should my NHS pension contributions be grossed up to x1.25 of the amount (￡17,930) since it was taken directly by my employer before tax? Thank you

My understanding is that pension contributions taken before tax would not be grossed up, as they already paid from gross salary. Only those that are paid from post-tax income would be. But others may be able to confirm.

Hi Don,

You should not gross up the pension contributions if they are taken before tax.
The rest of your calculation is correct.

Thank you.

Hi Roberto Robles,

Your understanding is correct.

Thank you.

Dear HMRC Admin So when I have spoken to the childcare team they have told me what the original poster has said is incorrect. That in terms of child care (not for annual allowance) that the NHS pension cannot be taken off as described. That this relates to private pensions and also the step 3 of 1.25 also does not apply. There seems to be totally different message from different departments. The person in childcare was adamant that child care adjusted income you could not take of NHS pension and that this is a very common mistake made.

Hi there, I would also like clarity on this as I am in a similar situation to Dom. As HMRC admin 20 has said Dom is correct, I am going to assume the taxable pay on NHS payslip (i.e. the gross pay less the pension contribution) is the figure that would be used to calculate eligibility for 30 hrs free childcare. Thanks, Paul

Hi,
 

This would be correct if the contributions are not deducted before tax is taken . Thank you.