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Posted Tue, 17 Jan 2023 11:25:40 GMT by Ian Townend
Hi, I understand that tax-free childcare is based on having a net adjusted income under £100,000. For me, this is based on my income minus grossed-up pension contributions. I recently got a car through the NHS lease scheme which is a salary sacrifice. I would like to check if the total taxable income should be my salary minus the amount I pay gross for the vehicle e.g. if I paid £500 a month then I would reduce my annual salary by £6000 for the purpose of the calculation of total taxable income and thus for the tax-free childcare. I have reviewed all the advice listed on regarding this and nothing is clear so I do not need to be directed to a site for guidance. Thanks.
Posted Tue, 17 Jan 2023 13:02:12 GMT by HMRC Admin 19

Please contact the Childcare Service team for advice.

Childcare Service helpline

Thank you
Posted Tue, 17 Jan 2023 18:46:39 GMT by Ian Townend
Hi - thanks for the reply but this isn't a question for the childcare services team, it just has an impact on what can be claimed through them. It's a question about whether total taxable income is reduced through the use of salary sacrifice schemes for the purposes of calculating the adjusted net income. The adjusted net income is used for multiple things and not just child care. Is it possible for an actual answer to be provided in these forums rather than just being referred to another service to contact? That would undoubtedly help others and reduce the number of duplicate questions in these forums.
Posted Fri, 20 Jan 2023 15:25:55 GMT by HMRC Admin 19

Under salary sacrifice for a vehicle you pay tax on the higher amount of, either the salary given up, or the taxable value of the car benefit.

You would not deduct this for the calculation.

Thank you.
Posted Tue, 31 Jan 2023 13:19:21 GMT by Ian Townend
So I just want to clarify, if I have an income of say £110,000 and pay a total salary sacrifice of £6000 per year for an EV vehicle then would my adjusted net income be £104,000? Thanks,
Posted Tue, 31 Jan 2023 13:34:29 GMT by Ian Townend
I should have added that the vehicle is electric so part of the zero emissions as well.
Posted Thu, 02 Feb 2023 15:21:11 GMT by HMRC Admin 20
Hi Ian Townend,

As you would have a Company Car benefit this figure would need to be included in your adjusted net income.

Thank you.
Posted Thu, 02 Feb 2023 20:59:10 GMT by Ian Townend
Hi, As this is an EV vehicle then which figure is included? The salary sacrifice or the BIK value? I have read online that it is the latter meaning that the former is removed from the ANI. Thanks Ian
Posted Wed, 08 Feb 2023 15:36:30 GMT by HMRC Admin 30

It would be the higher value of the two. 

Thank you. 

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