Working Tax Credits & Pension Contributions

[trinni]

I wonder whether anyone can answer this for me please?

I am a working single parent and am eligible to join the pension scheme. The scheme is a contributory one where I pay 5% of my salary and my employer pays 5%.

Would my WTC increase at all if I begin to make pension contributions?

Thanks

Nope, sorry.

The best way to answer your question would be to put your details into the Turn2Us Benefits Checker Run it once with your details as they are now and again with your pension contribution taken into account. If your income is low enough to qualify for WTC then making pension contributions should increase the amount you get.

I was told by the tax credits people that joining a scheme operated by my employers had no impact on my payments but joining a private one would. But who knows, as the advisors I speak to seem desperately unsure about everything.

Sorry for short response last night, was trying to settle a whingey baby! As llareggub says, company pensions have no impact on what you receive, DH contributes and it has no impact on what we receive, just checked on the notes for when completing the form and it's only personal pensions not company ones that can be taken into consideration.

It's worth saying that, even if your tax credits don't increase, every £80 you put in the pension scheme will get an extra £20 added to it in tax relief.

Thank you folks for your help. It's as I expected but a very good point by Cogito.

I will, of course, be joining.

Sorry, but this is incorrect advice. Pension contributions usually do make a difference to your tax credits.

If you pay into a company pension where contributions are made before tax then the amount you pay in has already been taken into account on your P60 so you don't need to take them off separately when you declare your income (this is where the confusion has arisen with people saying they don't count). However they still lower your taxable pay and so may increase your tax credits (from the following tax year as the first 2.5K of a drop in income is now ignored).

If you pay into a private or stakeholder pension then your pension contributions are paid after tax and you then have to take off the gross pension contributions from your P60 figure when you declare your income. As above, it won't affect your tax credits until the following year.