Skip to main content

This is a new service – your feedback will help us to improve it.

Posted Thu, 18 May 2023 06:57:48 GMT by sicky
Hi, I’m struggling to understand adjusted net income calculations, even after reading some of the posts on here so wanted to run through a simple example and hopefully someone can help - figures used are just as an example. Annual income £105,000 Salary sacrifice pension contribution 9% £9450/year Salary sacrifice car scheme £800/month, so £9600/year Is adjusted net income… Annual salary - salary sacrifice pension contributions - salary sacrifice car = £85950 ? If not, why not? The deductions are made ‘gross’ so what’s the difference? The minute my salary hits £100k, I lose tax free childcare and 30h free childcare and it essentially puts my wife out of work for the next 7 years or so because it’d more than wipe her salary out, so we’d be considerably ‘worse off’ than if I earned just £1 less. It’s staggering!
Posted Wed, 24 May 2023 12:59:10 GMT by HMRC Admin 32

If you have a company car, then you would pay tax on the company car benefit or the salary sacrifice depending on which is higher. You would not deduct that amount from the annual income.

Thank you.
Posted Wed, 24 May 2023 13:12:42 GMT by sicky
Hi So you sacrifice your salary so that you don’t pay tax on it, and then you pay tax on it anyway? So what’s the benefit of a salary sacrifice scheme? What about the pension contributions? Can you deduct those?
Posted Wed, 31 May 2023 07:56:23 GMT by HMRC Admin 20
Hi sicky,

Pension contributions can be deducted.

Thank you.


You must be signed in to post in this forum.