Child benefit/Pension question

[Tony D]

Hi,
I will earn around £58k of taxable income for 2016/17. This is made difficult to project due to an annual bonus payment mid March each year.
I buy £780 of child care vouchers (max I need) and contribute around £4,500 to my company DB pension, which is the maximum I am allowed.
Last tax year I was over the £50k off for child benefit and paid back £350.
I am in the process of setting up a private DC scheme but confused of how this will work, I.e how much to put in to come just below the £50k I read that 20% is added to the pension at source and 20% claimed at SA. With salary sacrifice it is easy to calculate as it comes straight from the gross. Do I basically need to work out the net amount to bring me under £50k, minus the 20% I will be able to claim at SA?
I'm in that middle income bracket of questioning the affordability of investing to retain the child benefit for two children, or taking the hit on 40% taxation coupled with the increasing reductions of child benefit. A bit of a minefield.

[Lambs]

Assuming you are swapping £780 of childcare vouchers for £780 of salary, then

£58,000 - £4,500 - £780 = £52,720

A private pension contribution of £2,176 (net) will bring you down to £50,000 of adjusted net income so that you lose no Child Benefit

We have a calculator and I have saved a version for you that uses these numbers at

http://taxationweb.azurewebsites.net/Pe ... ee8ee542b0

There is no personally identifying information; feel free to play around with the calculator to see how it works.

Regards,

Lambs

[Tony D]

Thank you, I will have a play with that later.
I spoke to the tax office today. As I already pay the maximum my company will allow via salary sacrifice, any further contributions will come from my net pay. I have challenged my business why I cannot join their DC scheme on a non matching basis but they won't play ball. The tax office have informed me that this will not reduce my salary, from where the CB calculation is made. I.e. If I cannot reduce my salary via sacrifice then I cannot avoid the charge. Is this correct?
At the moment I am looking at making a payment of around £450 for 16/17 (around £52,500) and have asked to have my tax code adjusted to allow for similar earnings for 17/18, as opposed to receiving and paying back.
It appears I am at the point of being unable to offset the amount I need to invest in order to avoid any loss of CB, which I guess is the journey between 50-60k.

[Tony D]

I have answered my own question. The tax office misinformed me this morning and I have seen the declaration against net pay pension contributions.
On reflection I probably can't afford to keep making the level of contributions to maintain my taxable adjustable pay under £50k for the coming years, so will take the hit and an adjustment on my code for 17/18. I need a net pay rise at some point!
Whoever said "tax doesn't have to be taxing" was telling porkies

[Lambs]

Yes, if you make a payment to a pension then it will definitely reduce your adjusted net income, on which your liability to a clawback of Child Benefit is assessed. Any amount you are comfortable with paying will reduce the amount of Child Benefit clawed back - if you tinker with the amounts in the aforementioned calculator, then you can see what works for you.

Regards,

Lambs