Tax credits from April 2011 and TC and pension contributions

[KidderminsterKate]

I'm struggling to understand the new thresholds for TC and wondering if anyone cleverer that I can!

Income will be about 34k and I have 4 kids. AT the moment I get about £275 every 4 weeks so not sure if this will be the same?

Also, I pay into a company pension scheme, taken at source through PAYE. I was wondering if I declare my gross income or my taxable income for TC calculations?

Thanks for any help.

TC income is gross less gross pension contributions - so your taxable income per your P60 in this case.
Is the £34k gross before pension or after?
Any childcare costs claimed.
Do you work / do you get 30+hrs element?
There are quite a few elements to the calculation.

My rough calculation on the figures you post has you at £276 every 4 weeks now, and £256 for 11/12.

we've got 4 kids and a similar income to yours, tc approx the same every 4 weeks (no childcare here)

pensions contributions should be deducted from your income for tax credits, so declare the taxable

you might want to look at the effects of increasing your pension contributions if your work offers a salary sacrifice or avc scheme - it can make a big difference

also if you make any regular contributions that are covered by gift aid, those get deducted from your income for tax credits (and I think this is at the donation + gift aid amount, so more than it actually costs you). In our case this means the more we pay in Guides and Brownies subs, the more tax credits we get

oh and I meant to say, or TC will be increasing a bit after april as the new allowances have a big increase in the child element bit

are you a single parent? do you work more than 30 hours a week?

thanks for the help

yes I work more that 30hours (just), no childcare and I am single

the 34k is gross - pension contributions come from that

bumpybecky what child element is increasing - by how much do you know?

Its ok I found the amount- £2.88 per week

they are listed here

basically the child element has increased from £ 2300 to £ 2555

Kate, I think your calculation would be....

allowances:
basic £ 1920
lone parent £ 1950
30 hour element £ 790
family element £ 545
child element £ 2555 x4

= £15425

income - first threshold = 34000 - 6420 = £ 27580
reduce by 41% = £ 11307.80

so tax credits per year = 15605 - 11308 = £4117

per 4 weekly payment = £ 316
per week = £ 79

BUT you need to take off your pension contributions from that income figure, also add on any savings income above £300 and take off the gift aid payments if you have any

for every £100 you pay in pensions you will get £41 more in tax credits

check my figures though please!

I only have one child left at home

I pay two company pensions so it adds up - I take that of the gross income for the year each time I claim. They never asked you know for a few years and I never knew...so got less money!

thanks so much becky!

I think for the first time ever I'll have been underpaid this year as didnt know about the pension thing. And I acutally understand our calculation!

ah - wrong katy! no wonder I couldnt' find the extra children...

LOL Katy#2! I can lend you a couple if you'd like...