Adjusted Net Income for Child Benefit

[schismatic]

Apologies if this has already been done to death, but I just want some clarity for my specific situation.

I'm trying to avoid the tax charge on child benefit. I currently expect to earn £55,094 after my employer pension is deducted for the 2018/19 tax year. I also anticipate paying 4 remaining months of Cycle to Work for the tax year 2018/19, amounting to £299.72.

I do not currently claim childcare vouchers, although I can do so through my employer up to a maximum of £243 per month or £2,916 per year. The childcare vouchers are deducted before tax; my benefits portal indictes a tax saving of £1,166.40 per year through claiming them, and a £58.32 saving on NI.

Am I correct in thinking that my ANI overall for 2018/198 if I take the maximum amount of childcare vouchers would therefore be:

£55,094 - 299.72 - 2916 = £52,078.28?



A further question I have:

I'm aware that to avoid the charge completely I should make additional pension contributions of >£2,000 per year. Any thoughts as to whether this is best done through AVCs with my existing pension, or whether I should consider opening a SIPP to make them from my take-home pay?

Many thanks in advance!

[Scotkat]

Also keen to understand this, can anyone shed light?

[robbob]

Generally i would expect the calc to be

Taxable pay per P60 (Note P60 figure will effectively have done adjustments as appropriate for salary sacrifice type items / pension payments deducted from gross salary)

+ P11D benefits (probably not relevant for the OP)
- grossed up value of pension payments made by you directly or as a deduction from your "net salary"

+/- any other less likely adjustments as appropriate eg interest received mileage claims etc

If you make payments into pension via deduction from your pay you always need to know whether its deduction from gross pay (taxable pay reduced - lower p60 so P60 is correct "adjusted total) or from net pay (higher p60 taxable pay total so you need to deduct grossed up value of payments deducted from your net pay)

With regard to vouchers/cycle to work i would presume you simply need to confirm with your employer how much your taxable pay will reduce by, as long as the taxable pay reduces by the amount your expect job done - HMRc will default to the P60 figure being correct.

Note the p60/P11D is everything with regard to year end totals never rely on anything shown in the tax code as being correct, this is dangerous as it will be after the end of the tax year when you receive both these items.

[Scotkat]

thanks robob