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i want to reduce my salary and put into a pension for CB claim

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By Ruddles
24th Feb 2018 08:31

Yes you can do it and for any amount you want (subject to pension input limits).

But all subject to your employer agreeing.

Others may comment on the wisdom of such action but that wasn’t the question, so I won’t.

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By tom123
24th Feb 2018 08:58

You will need to act quickly if you need your employers to change payroll - they may have already done February, which means only March can be changed.

You cannot 'backdate' this, so you need to impress on the employer the need to get March correct.

But, yes, paying into your pension - whether by salary sacrifice or by normal contributions, reduces your adjusted income for HICBC rules.

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24th Feb 2018 10:08

thanks , i actually didnt think about doing it for this tax year and i suppose i need to run the sums through my head for this tax year but certainly for next year i will ask they reduce my montly salary by the difference and put that into my pension.
Just some oher questions thats have popped into my head if i am putting everthing above 50k into a pension is it worth having salary sacrifice ?
I guess i need to find out from my company how much is going into my pension from salary sacrifice.

Should the p60 show my overall wage or my wage after salary scarifice? Ive used my P60 total on m tax return

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24th Feb 2018 10:22

Keep it simple.
Claim child benefit but tell them not to pay it to you. That protects your other rights.
The child benefit for 3 children was about £2500 for 2016/17. If you reduce your mortgage payment to £500 and give the other £300 a month to your wife. Obviously this is not financial advice. You need to talk to an IFA to see what is best for you really.

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By Matrix
to Marion Hayes
24th Feb 2018 11:00

Once child benefit has been claimed then the wife is eligible for state pension entitlements, this is not lost if the couple choose not to receive it at a later date, it does not need to be claimed each year if this is what you are suggesting.

Anyway taxpayers in Rob's position with income potentially below £60k should not disclaim it, since, if they want to claim it in the future any benefit can only be claimed prospectively.

Rob, if you have spare cash then you can put it into a personal pension before 5 April, it does not have to be an employer scheme. I am not a financial adviser either but it would be tax efficient given the high effective tax rate between £50k and £60k - I make it 67%.

Pay £10k into a pension to save £6.7k in tax (so if you didn't you would only get £3.3k net).

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to Matrix
24th Feb 2018 13:23

Hi Matrix. Remembering the major media fuss a couple of years ago when the number of people who had stopped or had been put off raised a spectre of negligent advice.

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By Matrix
to Marion Hayes
24th Feb 2018 15:18

There is no useful info I can find to hand on gov.uk but it is the claiming of the child benefit which gives rise to the state pension entitlement (when a baby is born). Stopping the child benefit, so electing not to receive the cash, has no impact on the fact that a claim was made.

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24th Feb 2018 15:09

The short answer is yes, pension payments will reduce your income for the purpose of HICB.

You need to speak to your financial adviser about how much you should pay. Financial advisers are pretty busy at this time of the year, so book that appointment now.

If you have three kids, your marginal rate between £50k and £60k is around 67%, so a tidy Government subsidy to anything you shell out.

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to lionofludesch
24th Feb 2018 19:41

thanks for the reply, im sorry but when you say 67% marginal rate do you mean thats what im saving by putting it into a pension. sorry im so dumb with things like this

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to robpeake75
25th Feb 2018 17:38

Yes.

Another point to note is that, if you're only entitled to part of the Child Benefit, you have to claim it all and then send part of it back via the HICB system. Sounds crazy - but the Child Benefit folk won't deal with partial claims. It's all or nothing.

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24th Feb 2018 19:22

thanks for the replies. Im going to try to do some sums. Im really not cut out for this kind of thing, learnign as i go.

Im still a little unsure what people are suggesting or whether you all think what im doing is bad idea or not, told you i was thick lol

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By SteveRA
24th Feb 2018 19:40

We are telling you that it is a good idea in principle, it will probably give you back your full child benefit and save tax. But we do not know everything about your circumstances and a personal financial adviser will run through your specific income and expenditure situation to make sure you can afford the pension contributions, that you realise the money will be tied up probably till age 55 or later.

S/he will also check whether there are an other considerations, beyond tax and child benefit, to be taken into account.

Best of luck, certainly worth putting time into investigating it further.

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to SteveRA
24th Feb 2018 20:46

SteveRA wrote:

We are telling you that it is a good idea in principle, it will probably give you back your full child benefit and save tax. But we do not know everything about your circumstances and a personal financial adviser will run through your specific income and expenditure situation to make sure you can afford the pension contributions, that you realise the money will be tied up probably till age 55 or later.

S/he will also check whether there are an other considerations, beyond tax and child benefit, to be taken into account.

Best of luck, certainly worth putting time into investigating it further.

thanks, i will have a look around for a financial advisor and see if i can get some help. i really do need someone to run through my figures as it looks right but i have a tendency to keep believing what ive wrote rather than looking at it from a different way

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25th Feb 2018 18:23

just another thought i get medical insurance at work its gbp2049 a year. If i was take my salary down to below 50k i need to drop it further otherwise the medical insurance will bump it back up wont they? or is that not needed in calculations?

I still dont know whether to cancel the salary sacrifice and just put what that is and my salary drop in my pension

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to robpeake75
25th Feb 2018 14:49

Stick with the salary sacrifice and either bump up contributions through increasing the sacrifice for March & the future (remembering the Minimum Wage rules may not allow you to pay in enough that way for this year in March alone) and top up with a personal payment to get you across the line for this year.

Pension input rules may be an issue but you probably have unused relief in the previous three years that can cover that. Your IFA can review & advise on that.

Yes you will need to factor in medical insurance and any other personal income for the year to get you below £50k

Put in enough to get you below the HR band to BR only and your spouse can elect to transfer 10% of her personal allowance to you as well

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By Melody
26th Feb 2018 03:45

Without commenting specifically on your situation, salary sacrifice is usually worth doing if you can, as long as your pension fund does not breach your annual or lifetime allowance after future growth

Ask HR whether you are eligible to financial advice (perhaps once a year) as a member of your company's pension scheme. Or HR themselves may be able to give you some advice as they know your personal circumstances.

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to Melody
26th Feb 2018 14:18

just to add to my topic above i spoke to a independant account today abotu the HIBC and he said tba i think HRMC have you bang to rights and said there probably isnt anything he coudl do for me. Im waiting for a financial advisor to call me back. I emailed the accountant at work and he emailed me back with the following

''The pension is 5% by you ten percent from the company so 15% in total.
But you can increase you contribution up 40000gbp a year to bring your salary below 50K and reduce both your tax bill your NHI bill and get the benefit of the tax savings in your pension at aprox 48%.
However this pot will only be available to you once you are over 55 under the present law.
I suggest increase your contribution by the half overpayment of your mortgage a month you told me about and start and isa with other half which you can dip in and out of as you require.
But remember you need ready cash and some spare for weddings , university et all.
But also when your children do go to uni or whatever you can always reduce your contribitions accordingly but take as much advantage of the higher rate tax relief on pensions whilst you can .
I fear it will be reduced to the basic rate for all some time in the near future.''

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to robpeake75
26th Feb 2018 14:27

robpeake75 wrote:

just to add to my topic above i spoke to a independant account today abotu the HIBC and he said tba i think HRMC have you bang to rights and said there probably isnt anything he coudl do for me.

Why don't you write to your MP ?

Especially if he/she is a Tory in a marginal constituency.

Ask him/her if your perception that HMRC are deliberately entrapping honest but unwary taxpayers with huge penalties is their official policy, as you didn't notice it in their manifesto.

The more people who write in, the more they'll see penalties as a vote-loser.

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to lionofludesch
26th Feb 2018 15:31

lionofludesch wrote:

robpeake75 wrote:

just to add to my topic above i spoke to a independant account today abotu the HIBC and he said tba i think HRMC have you bang to rights and said there probably isnt anything he coudl do for me.

Why don't you write to your MP ?

Especially if he/she is a Tory in a marginal constituency.

Ask him/her if your perception that HMRC are deliberately entrapping honest but unwary taxpayers with huge penalties is their official policy, as you didn't notice it in their manifesto.

The more people who write in, the more they'll see penalties as a vote-loser.

Yes my dad said something to me similar which i will write to them and express how unfair it is for the family unit. 1 parent working, still have 3 children to bring up compared to the family next door earning twice as much and getting child benefit.

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