Can anyone help me figure out what things are taken into account when working out your personal Net-adjusted income? I need to this to know whether a mix of pension contributions and other deductions can reduce the income but also whether other “incomes” increase the figure. Ultimately this is to see if I can avoid all/some Child Benefit High Income Tax Charge (future family planning).
For simplicity I will alphabetise each “income” or “deduction”.
NB: figures are totally fictional and annualised.
Nb: I don't have all of these incomes and deductions but wanted to be comprehensive for good measure.
A. Income: Annual salary - 60k (higher rate tax payer @40%)
B. Deduction: Pension @10% of gross - £6k
C. Income: National Insurance on pension contribution added into pension amount (~13%) - ~£800
D. Deduction: Employer EV Salary Sacrifice scheme - £9k Gross amount (after Tax and NI Savings ~£6k from net income – don’t know which values is relevant here)
E. Income: Savings interest for the tax year - £2k (tax free allowance @£500) so taxable amount = £1.5k
F. Income: Workplace stock held under scheme (not planning to release until all tax free in ~ 5yrs) BUT dividends are paid out in the form of more stocks into the scheme (no crystallisation of gain) - £1.5k (Tax Free allowance @£1k) so taxable amount = £500
G. Deduction: Charity donation - £1k + Gift aid @25%. Charity claim Gift Aid to make your donation £1250. I pay 40% tax so can personally claim back £250.00 (£1250 x 20%).
H. Income: Premium bonds “winnings” average (win rate @4.65%) - £2k
I. Income: Lodger via Rent a room scheme - £8k (tax free allowance @£7.5k) so taxable amount = £500
I find the “simple” examples on the gov website too simple: https://www.gov.uk/guidance/adjusted-net-income.
Based on the fictitious example above my understanding for the Net-Adjusted income is:
60k (a) – 6k (b) -9k (d) + 1.5k (e) + 0.5k (f) – 1.25k (g) + 0.5k (i) = £46,250 as the adjusted net income.
Based on the calc above Child Benefit High Income Tax Charge is not payable?
Is my understanding correct? If not, can you correct me?
NB1: c (NI Contributions saved) and h (premium bond winnings) are considered N/A.
NB2: I really do not have a clue about d – employer salsac EV scheme and whether it counts as a deduction.
NB3: tax free personal allowances was taken into account.
Thanks in advance all!
For simplicity I will alphabetise each “income” or “deduction”.
NB: figures are totally fictional and annualised.
Nb: I don't have all of these incomes and deductions but wanted to be comprehensive for good measure.
A. Income: Annual salary - 60k (higher rate tax payer @40%)
B. Deduction: Pension @10% of gross - £6k
C. Income: National Insurance on pension contribution added into pension amount (~13%) - ~£800
D. Deduction: Employer EV Salary Sacrifice scheme - £9k Gross amount (after Tax and NI Savings ~£6k from net income – don’t know which values is relevant here)
E. Income: Savings interest for the tax year - £2k (tax free allowance @£500) so taxable amount = £1.5k
F. Income: Workplace stock held under scheme (not planning to release until all tax free in ~ 5yrs) BUT dividends are paid out in the form of more stocks into the scheme (no crystallisation of gain) - £1.5k (Tax Free allowance @£1k) so taxable amount = £500
G. Deduction: Charity donation - £1k + Gift aid @25%. Charity claim Gift Aid to make your donation £1250. I pay 40% tax so can personally claim back £250.00 (£1250 x 20%).
H. Income: Premium bonds “winnings” average (win rate @4.65%) - £2k
I. Income: Lodger via Rent a room scheme - £8k (tax free allowance @£7.5k) so taxable amount = £500
I find the “simple” examples on the gov website too simple: https://www.gov.uk/guidance/adjusted-net-income.
Based on the fictitious example above my understanding for the Net-Adjusted income is:
60k (a) – 6k (b) -9k (d) + 1.5k (e) + 0.5k (f) – 1.25k (g) + 0.5k (i) = £46,250 as the adjusted net income.
Based on the calc above Child Benefit High Income Tax Charge is not payable?
Is my understanding correct? If not, can you correct me?
NB1: c (NI Contributions saved) and h (premium bond winnings) are considered N/A.
NB2: I really do not have a clue about d – employer salsac EV scheme and whether it counts as a deduction.
NB3: tax free personal allowances was taken into account.
Thanks in advance all!