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Posted Tue, 15 Nov 2022 12:15:04 GMT by shojam13
Hi, I am completing a self assessment for the FY 21-22, for the first time - purely due to receiving Child Benefit and my net adjusted income for last year coming in at £50,180 (just over the £50k Child Benefit High Income Tax Charge threshold). I know I will therefore have to pay a small amount back via this tax charge. The tax charge is based on 'Net Adjusted Income', so I am trying to work out how I provide my net adjusted income via the self assessment form. Am I correct that I need to add my full pay for the tax year (as per my P60) under my Employment Details, and then answer 'Yes' to the question regarding pension contributions on page 3 of 'Tailor Your Return' - and add my 'grossed up' pension payments for the year in that pension section? My concern is that under the pension section it states "Do not include payments you make to your employer’s pension scheme which are deducted from your pay before tax or payments made by your employer" - I believe this is how my pension scheme currently works (my contributions are deducted from my pay before tax) and therefore the form is telling me not to add it, however this is the only way I can correctly let HMRC know what my 'net adjusted income' is? I am raising this because this is how I have filled out my self assessment form currently, but it has now changed my tax code for the year 22-23 based upon me making payments to a personal pension scheme which I think is incorrect. Finding the whole thing incredibly confusing and would appreciate some clear guidance. Thanks.
Posted Thu, 17 Nov 2022 12:01:11 GMT by HMRC Admin 32
Hi,

Adjusted net income is the total taxable income, before any personal allowances and less certain tax reliefs.  

Guidance on how to calculate this can be found here:

Personal Allowances: adjusted net income

It is not necessary to calculate your adjusted net income when completing your Self Assessment tax return. Self Assessment will do this for you, as it is based on the entries on the tax return.

On SA102 or the employment section of the online form, you enter the pay figure stated on your P60/P45, not forgetting tax deducted. The P60/P45 pay figure is your earnings after payments to your pension scheme have been removed. You should also include benefits provided by your employer on a P11d.  

To claim higher rate tax relief on your pension payments, you enter the amount of payments made on page 4 of SA100, box TR4.1. You also enter gifts made to charity.

In the other sections of the tax return, you report any other sources of taxable income.

Some entries on your tax return will impact the tax code for the next year.

Thank you.

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