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Posted Tue, 29 Aug 2023 12:41:35 GMT by
On the phone with an HMRC agent today I found out that, although taxable income is reduced by salary sacrificed pension contributions, they actually add this back in as it is "potentially taxable income". I was told explicitly if you are reducing your taxable income through salary sacrifice this does not comply with their eligibility criteria. For example, you earn £110,000 but salary sacrifice £20,000 into a pension to make your taxable income £90,000. You would still not be eligible for Child Benefit account nor the 30 hour free childcare, because the £20,000 would be added back in. The HMRC advisor on the phone explained and apologised that this is not clear on today's websites. I wanted to make a post to make this clear for others as it took me by surprise. It would be nice if an HMRC rep could confirm this.
Posted Tue, 29 Aug 2023 14:45:04 GMT by
Sorry to comment again so quickly but after scouring the forums and HMRC website and finding no evidence of this I ended up calling one again and finding out this is not true. If you earn £110,000 but salary sacrifice £20,000 into a pension to make your taxable income £90,000 you would be eligible for Tax Free childcare and 30 free hours. So long as taxable income is reduced. Just like the "adjusted net income" page says. :D
Posted Wed, 26 Jun 2024 09:14:42 GMT by Cillian
Hi could someone from HMRC please respond to this and confirm that you can take the salary sacrifice amount from earned income as we have also been told on the phone by a HMRC rep we can't but everything I read and my understanding is you can?
Posted Tue, 02 Jul 2024 12:22:19 GMT by HMRC Admin 10
Hi
You're correct - salary sacrifice would be deducted from your adjusted net income calculation, which would then be used to confirm Tax Free Childcare eligibility.

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