Adjusted net income and child benefit threshold

[ruasonid]

Having a discussion with my accountant about this.

If my total taxable income was £54,999 (let’s say £44,999 on salary and dividends to date plus an additional net dividend of £10,000) and I made a private pension contribution of £5000 without tax relief my adjusted net income would be £49,999? In which case there would be no impact to Child Benefit.

The calculator at https://www.gov.uk/child-benefit-tax-calculator/main
seems to indicate the 5000 pension contribution would bring me back below the £50,099 threshold with no tax charge to pay. Does this seem correct?

Incidentally, the pension contribution (of £5000 net in the example) is to a private pension and not deducted from salary (made after dividend payment).

[Louisa@InTouch]

The child benefit clawback is calculated on your gross income before the personal allowance is deducted.

Therefore if you had total income (salary and gross dividends) of £54,999, without the pension contribution = you would have child benefit due back to HMRC.

If you made a personal gross contribution of £6,250 (£5,000 net), this would reduce your adjusted net income below £50,000 = so no child benefit would be due back to HMRC.

But if your total gross income was £64,999, less your £10,000 personal allowance= = taxable income of £54,999, with a net pension payment of £5,000 = you would have child benefit due back to HMRC.

So... You might want to check what your actual figures were

[ruasonid]

Thank you Louisa. That is what I thought. In the example above the gross amount is before personal allowance is deducted. The guidance I was given was that I would have to pay a charge if my gross was over £50,000 (the actual figure is £50099). Its the pension contribution that makes the difference.