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Posted Tue, 14 Feb 2023 14:24:24 GMT by paul307130
Hi there, I know there are other posts however I am still unclear and I have read the information page on HMRC regarding this also. I am trying to understand where I can land after adjusted net income for the purpose of childcare. Say I have a total salary of £104,000 I have taxable benefits of £1,000 in my tax code and £100 payrolled benefits I pay £4,500 via a salary sacrifice scheme into an employers pension scheme. (This is pre tax and only the employee contribution) Can I also deduct this amount? Is my adjusted net income £99,500 (£104,000-£4,500) or £100,600 (£104,000+£1,000+£100-£4,500)? If it is £99,500 - does this mean I'm not subject to the Personal Allowance Taper restriction? Also, does this mean I don't have to file a Self Assessment return? Many thanks
Posted Thu, 16 Feb 2023 14:44:40 GMT by HMRC Admin 32

You can deduct the amount, the taxable benefits and payrolled benefits would be included in your salary figure which would take you over £100,000.

Thank you.
Posted Fri, 17 Mar 2023 14:17:03 GMT by paul307130
Thank you. The HMRC guidance on the calculation of Adjusted Net Income states that "Interest" should also be included. If I have interest that is from a cash ISA (ie non-taxable) and from a Savings account (under the Personal Savings Allowance) - do either or both need to be included in the total sum of Adjusted Net Income?
Posted Mon, 20 Mar 2023 14:24:47 GMT by HMRC Admin 17

Only taxable interest is taken into account when calculating Adjusted Net Income,
so interest from a cash ISA  should not be included.     

See Link:

Personal Allowances: adjusted net income  .

Thank you.
Posted Mon, 20 Mar 2023 15:08:32 GMT by paul307130
Should the Adjusted Net Income ('ADI') be calculated based on earnings/interest etc BEFORE deduction of allowances (such as a Personal Allowance or Personal Savings Allowance) or AFTER deducting these allowances? Based on the HMRC guidance on how to calculate ADI, it implies the ADI is before the deduction of any allowances. In which case, Savings interest (ie not ISA interest) should also be included as it is technically "taxable" income irrespective of whether it is covered by the Personal Savings Allowance. Is this correct?
Posted Fri, 24 Mar 2023 11:46:31 GMT by HMRC Admin 20
Hi paul307130,

It is before those allowances.

Thank you.

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