High Child Benefit Charge - How to fill out the self assessment?!

[WinterWeather1]

I'm hoping you lot will be able to help me as I have already managed to stump 2 accountants today with this.
My husband needs to do a self assessment for the child benefit that we claim. From reading several forum posts and Martin Lewis, I am of the understanding that pension contributions (DH is defined benefit pension) can be deducted from the gross salary to get the adjusted salary.
This would make a significant difference to how much we need to pay back.
The issue I am having is how I put this information on the self assessment form. I put in the full gross salary as it appears on his P60 on the employment page but the only place I can see to put the pension is for claiming back tax relief on it. This then causes the system to think it owes us nearly £900 which is incorrect as I am pretty sure DH already gets tax relief on his pension.
Can anyone give me a dummies guide on how to fill out the form so that we pay the correct amount?
The childcare tax calculator makes it seem so easy but the form is so confusing!

Following!

Peter is making contributions to a personal pension plan hence his grossed up pension will reduce his net income.
Your husband has a workplace pension. You aren’t trying to get tax relief but trying to reduce his salary by using the pension contributions he’s making which you can’t do. It means the same as trying to obtain a tax benefit.

Your husband’s contributions to an employer run scheme obtains tax relief via a net pay arrangement. This is done by the employer subjecting his net pay to PAYE – i.e. taking gross pay, less deducting the pension contribution and taxing only the net balance. Therefore,less tax is deducted under PAYE. If you use the pension contributions made again on the tax form to reduce his salary, you are effectively trying to get another tax relief (via paying back less of the child benefit) twice which is incorrect.

Peter is making contributions to a personal pension plan hence his grossed up pension will reduce his net income.

It doesn't matter what sort of pension it is - OP's dh is paying pension contributions. His gross salary is £58k. Out of that £58k he makes £4k of pension contributions. He pays tax in the remaining £54k. Therefore his taxable salary is £54k. But his P60 will say £58k.

Okay.

If you use the pension contributions made again on the tax form to reduce his salary, you are effectively trying to get another tax relief (via paying back less of the child benefit) twice which is incorrect.

It's not incorrect - that's how it works. You can also reduce the salary for CB purposes by making other deductions, charity giving, tax free childcare vouchers.

But he may only be getting tax relief at basic rate - if he's a higher rate tax payer then it is possible that he would be entitled to additional tax relief at the higher rate.

I'm stuck too. So if your employer makes pension contributions you can't deduct that from the income figure you put on the return? what about if employer pays for private medical insurance does that need to be added to the income figure? it's not on the p60

@titchy

Peter is making contributions to a personal pension plan hence his grossed up pension will reduce his net income.

It doesn't matter what sort of pension it is - OP's dh is paying pension contributions. His gross salary is £58k. Out of that £58k he makes £4k of pension contributions. He pays tax in the remaining £54k. Therefore his taxable salary is £54k. But his P60 will say £58k.

I am sure his p60 should show 54k though

As it's being done via salary sacrifice. The employee gives up say £4K and the employer gives &4k to the pension. Do employee pays tax and ni on 54k.

It's important to know what the theoretical gross salary is, before pension payment. Most payslips show this somewhere.

We put DH’s AVCs in there and that brings us under the threshold. Anything else that comes off before tax helps with this - bike to work scheme for example.

The pension isn't a salary sacrifice. He puts in 7.35% and his employers puts a percentage in too. It's a defined benefit pension.

Oh and DH always gets a refund, every year. The first year it freaked us out completely!

@deathbollywood

I'm stuck too. So if your employer makes pension contributions you can't deduct that from the income figure you put on the return? what about if employer pays for private medical insurance does that need to be added to the income figure? it's not on the p60

Private medical and other benefits like company car, loans, living accommodation are declared on a page quite near the end of the process iirc - you take the figures from your P11D.

@burnoutbabe

No - the P60 will show his salary before ANY deductions. Mine shows my actual salary, not my salary after any salary sacrifice.

The type of pension is irrelevant! DB, personal, DC doesn't matter. It's what he (not employer) pays in each year that gets discounted for CB purposes.

@deathbollywood

I'm stuck too. So if your employer makes pension contributions you can't deduct that from the income figure you put on the return? what about if employer pays for private medical insurance does that need to be added to the income figure? it's not on the p60

Irrelevant what the employer pays. And stuff like health insurance that employer pays is a benefit that is taxable so that too doesn't count.

@titchy

The type of pension is irrelevant! DB, personal, DC doesn't matter. It's what he (not employer) pays in each year that gets discounted for CB purposes.

It's relevant if pension done via salary sacrifice as then the husband does not actually pay any of it. But would also show a lower amount on his p60.

It's relevant if pension done via salary sacrifice as then the husband does not actually pay any of it. But would also show a lower amount on his p60.

Mine is done as a salary sacrifice and still my P60 shows my full salary.

Regardless, OP has said that her dh's P60 shows his full salary before his pension so he would need to take these off on the form.

This stuff always stresses me out! My P60 shows under £50K even though my salary is a fair bit more. I do pay a lot of pension though and sadly contributions keep increasing plus I have AVCs. A financial advisor said that this is fine for CB as did the workplace pension person. This figure though takes into account any pension I pay but obviously none that work pays. I think I am right. I don't do a tax return though and have never accounted for charitable payments (I keep a record if ever needed). I always make sure I stay under £50K taxable.

Have I got this wrong? I am getting a bit confused in the discussion as I thought the op was fine in their approach.

Not sure but this may help. Failing which phone them if not sure.

www.gov.uk/tax-on-your-private-pension/pension-tax-relief

Claim tax relief in England, Wales or Northern Ireland
You can claim additional tax relief on your Self Assessment tax returnn_ for money you put into a private pension of:
• 20% up to the amount of any income you have paid 40% tax on
• 25% up to the amount of any income you have paid 45% tax on
You can also call or write to HMRCC_ to claim if you pay Income Tax at 40%.
Example
You earn £60,000 in the 2020 to 2021 tax year and pay 40% tax on £10,000. You put £15,000 into a private pension. You automatically get tax relief at source on the full £15,000.
You can claim an extra 20% tax relief on £10,000 (the same amount you paid higher rate tax on) through your Self Assessment tax return.
You do not get additional relief on the remaining £5,000 you put in your pension.

I am looking at my P60. There are two boxes on it highlighted as needed for tax returns. One is 'pay in this employment' and the other is 'tax deducted'.
There is no other pay amount on the P60 as I don't have any other jobs.
I do keep a spreadsheet of my payslips, with running totals of pension contributions so I can check this all adds up. (Ever since a TUPE a few years back 'lost' three years of pension contributions and it took a lot of shouting to get back...)
'Pay in this employment' + pre-tax pension contributions (defined benefit - I'm public sector) = my headline salary.

For tax returns I would therefore declare a lower pay value which has already had the pension deducted before tax. I'm not sure how some folk have their P60s showing their full headline pay... unless their payroll has got it badly wrong. (See my TUPE experience - it happens!)

@Heronatemygoldfish

I am looking at my P60. There are two boxes on it highlighted as needed for tax returns. One is 'pay in this employment' and the other is 'tax deducted'. There is no other pay amount on the P60 as I don't have any other jobs. I do keep a spreadsheet of my payslips, with running totals of pension contributions so I can check this all adds up. (Ever since a TUPE a few years back 'lost' three years of pension contributions and it took a lot of shouting to get back...) 'Pay in this employment' + pre-tax pension contributions (defined benefit - I'm public sector) = my headline salary.

For tax returns I would therefore declare a lower pay value which has already had the pension deducted before tax. I'm not sure how some folk have their P60s showing their full headline pay... unless their payroll has got it badly wrong. (See my TUPE experience - it happens!)

Agreed. My P60 has always shown my post salary sacrifice salary. In 3 different jobs with 3 different payrolls.

I just completed a self assessment for DH for child benefit charge. It wasn’t an easy form to fill in! Are you sure you’re clicking the right boxes-basically you only want to click the option that you think you might need to pay the child benefit charge and say no to everything else, including tax relief on personal pension payments (because I think you’re saying your DH pension isn’t taxed at source so no relief due).

Selfishly thank you @Heronatemygoldfish, this fits with my experience and makes me think I am fine. My p60 shows pay in this employment too which is under CB limit. No other job either. I also keep a spreadsheet due to paranoia about CB generally.

You're welcome @goingpearshaped

I don't think it paranoid to keep a spreadsheet where tax etc is concerned, not after what happened to me with the lost pension! Now I'm facing another TUPE to yet another Trust so I'm going to be watching my contributions like a hawk... my spreadsheet includes things like professional subs, donations, interest and the CB so it makes filling out the Return easier and I don't forget to include something which is tax deductible.

You need the March payslip. This will give you the taxable income and the total of any pension contributions on which further relief may be due, if he is a higher rate taxpayer. If there is no pension figure you don't need to add anything to the return. If there is a pension figure you apply x 100/80 and enter this at box 1 on page TR4. If there is no pension figure in the March 2021 payslip the taxable figure is after pension relief. No further relief is due and no further deduction for HICB purposes.