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Posted Mon, 06 Jan 2025 11:40:47 GMT by David
Good morning, I have read multiple threads on how to calculate adjusted net income and am still not 100% sure how pension contributions are or re not deducted so asking again in the hope to get clarity.
In my example, I have a base salary, a car allowance, an annual bonus and LTIPs. In this tax year due to strong company performance my bonus and LTIPs will take me over the £100K threshold for childcare.
My pension is paid through a normal employee pension scheme, i.e. deducted pre-tax. So, in my case, is adjusted net income calculated as Base salary + Bonus + Car Allowance + LTIPs - gross pension deductions (i.e. what goes out of my wages pre-tax)?
If this is the case, to stay below the threshold, can I simply instruct a one-off pension contribution to my employer to a value to keep me below the limit?
Hope that all makes sense - I've never found myself in this fortunate situation before so have never really looked into tax implications etc. Thanks
Posted Wed, 15 Jan 2025 10:31:57 GMT by HMRC Admin 1 Response

Unfortunately, HMRC is unable to provide specific or tailored advice through the Online Community Forums and cannot comment on any form of calculation, example or scenario as we may not be in possession of all the relevant information.

While the HMRC Customer Forum is for general queries only and is intended to help our customers self-serve and we are unable to provide financial advice or further interpretation of the guidance provided on GOV.UK. you may find the following of some use:

Adjusted net income is your total taxable income before any Personal Allowances and less certain tax reliefs*. You can find more details, and work out your adjusted net income here:

https://www.gov.uk/guidance/adjusted-net-income

Personal Allowances: adjusted net income - GOV.UK (www.gov.uk)

* This may include your pension, but does not include Income Tax and National Insurance.

If your employer deducts the pension contributions from your gross pay before tax is calculated then you would not deduct again for the adjusted net income.

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