Dazed&Confused
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Child Benefit Charge and large pension contributions via salary sacrifice - charge to pay?
Hi, I am receiving mixed messages and advice for my self assessment (2023 to 2024) regarding the Child Benefit High Income Charge. A colleague in a similar situation (salary sacrifice, pay and pension contributions) as I am spoke to HMRC recently who confirmed he did NOT need to declare it and had NO charge to pay. I spoke to HMRC many months ago, answered multiple questions posed by them and was advised I do NOT need to declare it and I had NO charge to pay. Advice on the Gov websites, self assessment paperwork, as well as the HMRC website which cited salary sacrifice as , 'in some cases, this will mean you and your employer pay less tax', multiple accountant websites and 'help' websites appear unclear about whether I do or not have anything to declare. I am in salary sacrifice at work and my pension, including AVCs - all classed as 'PaySave' by my employer - come out before tax and national insurance. My gross salary is £57.2K. My Government Gateway confirms my 'taxable income' is £44.9K. My P60 confirms 'total for year pay' was £44.9K. Tax deducted on both website and P60 match, and that was £6.5K. Total pension contributions (6% by me, 12% by my company, the rest AVCs) was £22.7K in the tax year. I also had £840 of Child Care vouchers and £300 of holiday buy. ALL via my company's salary sacrifice scheme. I received a 1 off bonus of £500 in the year which my employer paid directly via the same process above, directly in to my work pension. With interest earned (I had no shares to sell) which was ~£500 the 'total net adjusted income' in my head took me to ~£45.4K. Using the HMRC Child Benefit Tax calculator, I was not looking to answer 'yes' to 'pension contributions deducted from your pay (do not include contributions deducted before tax), as in my understanding, I'm not looking to claim more. I was not expecting to put my £500 bonus here either. The HMRC 'adjusted net income guidance' page cites taking off payments made gross to pension schemes - those that have been made without tax relief, but does not site salary sacrifice. However multiple sites flag salary sacrifice, in particular for pensions, as legal options. In one example, https://Getpenfold.com/news/avoid-child-benefit-tax 'another option for reducing your child benefit tax charge is through salary sacrifice... Popular examples include a pension contribution or childcare vouchers'. Question 1: Do I have anything to declare? Question 2: Do I enter £57K or £45.5K in the box? Question 3: IF 'yes' to question 1...please clarify. Question 4: IF 'yes' to question 1, was I and my colleague misinformed by HMRC and my understanding is wrong and so I need to inform my colleague he has a charge to pay? Any clear and concise guidance would be greatly received. Regards