High Income Child Benefit Charge - What is deductible?

[John Lindsay]

Afternoon All,

I was on hold this morning to HMRC for an hour to be greeted by someone who had apparently no idea that he worked at the tax office. He claimed that all the info he could give would only be the same as was on the website. Anyway. I digress.

What I’m trying to understand is which of my income can be discounted from the calculation to work out how far into the HICB taxation band I am, and I wondered if there was anyone here who had the answers. The website simply says to deduct your pension contribution, no mention of AVC’s or other salary sacrifice options. See below:



I currently receive the following payments: Salary, Shift Allowance, Medical Benefit, Bonus and Overtime. Combined (for 23/24 Tax Year) these will be worth something in the region of £58000, assuming I don’t do any more OT (which is entirely possible). This would take me over the £60k mark at which point I know I’d be as well to stop my partner receiving the payments.

However. From that c.£58k I have various salary sacrifice benefits, these are as follows:

Pension £2100
Pension AVC £1050
Company Share Scheme £1800
Annual Leave Purchased £800
Totalling £5750

So, my question that HMRC couldn’t answer is this. Which figure do I use for HICB taxation? Do I deduct all my non taxable income, leaving £52250, or do I just deduct my pension, as this is the only non taxable income that the HMRC website instructs you to deduct, if so, do I include my AVC?

Apologies for being so long winded, I did search before posting but the last thread I could find in relation to this was from 2013, and it was asking something different altogether.

Thanks in advance for any advice you can give.

John

[Consigliere]

John Lindsay said:

However. From that c.£58k I have various salary sacrifice benefits,
Totalling £5750

John

the figure you're looking for is the 'net adjusted income' and this is your income minus you salary sacrifice items because you are getting these items and not a portion of salary instead.

[duckson]

What does your payslip say for the end of last years tax year that has just finished?
On mine it has ‘Cumulative Taxable pay’ which is my pay minus my Sal sac pension, Pension AVC payments and SIP shares (while I’m under the £50k someone in the office wasn’t and he had to put a self assessment in and used this total so it seems the SIP payments come off your total….you don’t need to add them back on, win!).

I compared last years (21-22 tax year) March ‘22 pay packet with the P60 and this cumulative amount tallied between them both and so this is what is reported to HMRC (I’d assume).

It’s my understanding that on this total you’d need to add any savings interest (even if under the £500 or £1000 allowance, just add it all on for these purposes).

I don’t have any medical payments so not sure if you’d also need to add those on, I seem to recall it does mention something about this on HMRC?

[Somebody]

The key word is "taxable" income, so after salary sacrifice items.

So e.g.
Gross £50k
SS (£ 5k)
Taxable £50k

[John Lindsay]

Thanks for the replies.

Consigliere said:

the figure you're looking for is the 'net adjusted income' and this is your income minus you salary sacrifice items because you are getting these items and not a portion of salary instead.

That is what I assumed/hoped to be true, however I’m sure I read somewhere that it wouldn’t be allowable to include deductions such as Cycle 2 Work etc. That being said, I can’t find it again.

I’ll carry on with this thinking, thanks again.

[RicksAlfas]

John Lindsay said:

This would take me over the £60k mark at which point I know I’d be as well to stop my partner receiving the payments.

The usual advice is to keep claiming it, even if you have to pay it back as it helps contribute to your partner's state pension entitlement.
e.g.
https://arthurboyd.co.uk/why-you-should-still-regi...

[Consigliere]

John Lindsay said:

That is what I assumed/hoped to be true, however I’m sure I read somewhere that it wouldn’t be allowable to include deductions such as Cycle 2 Work etc. That being said, I can’t find it again.

I’ll carry on with this thinking, thanks again.

Anything that comes off before you get taxed is deductable. Cycle 2 work is included, as are ss pension payments.

Also Giftaid can help reduce your taxable income

[John Lindsay]

RicksAlfas said:

The usual advice is to keep claiming it, even if you have to pay it back as it helps contribute to your partner's state pension entitlement.
e.g.
https://arthurboyd.co.uk/why-you-should-still-regi...

It’s possible to claim the benefit but elect to not receive the payment. If/when the situation arises that’s the route we’ll go down.