Calculating Net Adjusted Income for Child Benefit High Income Tax Charge

Hi, I wanted to query two conflicting pieces of information on your website that have confused me. I am trying to calculate my 'Net Adjusted Income' for the purposes of calculating a Child Benefit High Income Tax Charge. My pension contributions are made via an employer scheme under a net pay arrangement (deducted before tax). If I go to Gov.uk's Child Benefit tax calculator, I am told to simply include my "salary before tax (with pension contributions under net pay arrangements deducted)" - so I assume this is the figure on my P60, which takes into account my (actual, not 'grossed-up') pension contributions. However if I go onto the Gov.uk Guidance "Personal Allowances: adjusted net income", then under Step 3 it advises me "If you made a contribution to a pension scheme where your pension provider has already given you tax relief at basic rate, take off the ‘grossed-up’ amount - what you paid plus the basic rate of tax. So, for every £1 of pension contribution you made, take £1.25 from your ‘net income’." Which figure am I therefore meant to include? Is my adjusted net income the figure on my P60, or am I meant to deduct a higher amount based on 'grossed-up' pension contributions? Clarification here would be appreciated.

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.

Hi, The answer given to this query still doesnt answer the actual question of where do I put the net adjusted income value on the self assessment form? i cant find anywhere to input my pension contributions therefore do i just adjust the value myself and put it in the Pay from box(total from p45 or p60). if not then where do I enter my pension contributions value as I cant find anywhere to put this in the online form

Hi,

You do not enter the adjusted income figure on the return. It is calculated based on the information you enter on the return. When completing the tailor your return section, you need to answer yes to the question which asks if you made pension contributions.

Thank you.

I have a similar query. I will earn £57k in year ending April 23. I have claimed child benefit all year. £57 k will be the figure on my P60. My pension is ‘relief at source’ so I understand this has no bearing on my net adjusted income although I wonder if you could clarify why? If I was to put £7k into a private pension would this make my net adjusted income £5Ok?

Hi,
 

If the pension contributions are not shown on your P60, this means that the amount was deducted before tax was taken and does not qualify for further tax relief. Any payment made direct to the pension provider would qualify for relief . Thank you.

Hi, my query is similar to the first post of; "I am trying to calculate my 'Net Adjusted Income' for the purposes of calculating a Child Benefit High Income Tax Charge. My pension contributions are made via an employer scheme under a net pay arrangement (deducted before tax). If I go to Gov.uk's Child Benefit tax calculator, I am told to simply include my "salary before tax (with pension contributions under net pay arrangements deducted)" - so I assume this is the figure on my P60, which takes into account my (actual, not 'grossed-up') pension contributions. However if I go onto the Gov.uk Guidance "Personal Allowances: adjusted net income", then under Step 3 it advises me "If you made a contribution to a pension scheme where your pension provider has already given you tax relief at basic rate, take off the ‘grossed-up’ amount - what you paid plus the basic rate of tax. So, for every £1 of pension contribution you made, take £1.25 from your ‘net income’." I want to know this as I don't want to register to do a self assessment if I am not required to- therefore if the gross salary is over the threshold but there is employee pension contributions made (under auto enrolment scheme and therefore before tax) do I take the actual pension deduction from my P60 and deduct this from my Gross salary to get my adjusted income or do I gross up this pension and then deduct it? Reason I ask is because one figure would mean I need to register and the other wouldn't. Thanks you

Hi J T
The figure on the P60 would already have the pension contributions deducted and you should use this figure.
Thankyou.
Regards.

Thank you- Can I confirm if my P60 adjusted income figure is below the threshold I don't need to complete a self assessment tax return even if my gross salary is above the threshold ? Thanks

Hello, I have a query regarding the Tax Free Childcare. Our tax free childcare is no longer available to us due to the HMRC have deciding my income is likely to exceed £100,000 in this tax year. Last year my P60 'Total for year pay' figure was £98000 and 'Total for year Tax Deducted' was £29000. Is this the figure that is used? I have no other income. I get a bonus in the April pay check so would they have based my income on this figure? I can guarantee that I will not be over the £100,000 for 2023-2024 Any help would be greatly appreciated

Hi JT

The taxable figure on the P60 is the one submitted to HMRC. If that is below £100,000 you will not be required to complete a Self Assessment.

Please note that if you have any employment benefits these need to be added to the pay figure.

Thank you.

Hi colleigh,

It would be the total of any income reported by your employer plus any employment benefits. If you believe you will not have an adjusted net income over £100,000 for 23/24 then you can apply.

Guidance can be found here: Personal Allowances: adjusted net income

Thank you.

I have a similar query to the above. If on paper a salary is £51000 or thereabouts, but the starred figure on a P45 for tax year 21-22 is c.£49000 - does that mean there is no requirement to submit a self assessment form in relation to the child benefit charge? I'm reading the replies above and it sounds like the starred figure takes into account pension contributions and is the the figure the HMRC requires, therefore we are not liable to pay a CB charge, and do not need to complete a self assessment. Is this correct? Many thanks.

Hi Sarah,

The figure on the P45 is the taxable figure and is the one you should use.

Thank you.

Hello, Does my contribution into my partner's SIPP (or my child Junior SIPP) lower my Net Adjusted Income for the purposes of Child Benefit High Income Tax Charge? (I am sorry if it was answered before - I could not find it). Thank you

Hi,

Only contributions to your own SIPP would count.

Thank you.

Hi, I am self employed and I need help to find out if I have to pay higher rate tax charge pls. My sa302 has the following information: Profit from business 30k and profit from Uk land and property 32k, minus personal allowance 12,570. This makes the taxable income 49,430. Also towards the bottom it mentions ‘minus relief for finance costs’ for land and property at 20% of 15k (total my mortgages interest for the year). My accountant is adamant that I’m not due any higher rate tax charge but I’m not sure. Any help would be much appreciated pls.

Hi Dave_ebay Ebay,
You may have to pay High Income Child Benefit Charges (HICBC) if your income before personal allowances, exceeds £50000.
For every £100 above £50000, 1% of the child benefit is required to be repaid.
When your income reaches or exceeds £60000, then 100% of the child benefit will need to be repaid.
 Based on net self employment income of £30000 and net income from property of £32000, your income is over £60000.00 for child benefit purposes, which would mean all the child benefit would need to be repaid.
Please  have a look at:
High Income Child Benefit Charge
For some guidance on high income child benefit charges.
Thank you. 

 

Hi, I earn £60k annual salary and I receive child benefit for two kids.. I am still in my 9th month of receiving these benefit. Will I have to pay any of it back, if yes how can I avoid paying these back. My wife earns £14 annual salary.

Hi,

As you earn £60000 you would be paying back the full child benefit received. The higher income child benefit charge is against the higher earner in the couple which would be yourself.

You would need to register for Self Assessment as the higher income child benefit charge is a Self Assessment criteria. You can register here:

Register for Self Assessment if you are not self-employed

Thank you.