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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, 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.