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Sam
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My salary last year because of an unexpected bonus took my

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My salary last year because of an unexpected bonus took my salary to £61K. As I am claiming child benefit for 2 children I am aware I will have to pay back the full value of the benefit. I am looking to contribute more into pension for 2014/15 but cannot work out a "sweet spot" for the value of the additional contributions do that I don't fall foul again should I be paid the bonus again next year which is increasingly certain and will likely push over £60K again.

Is there some online calculator you are aware of where I can punch the numbers in i.e. salary, pension contribution, annual bonus value and shows its affect on child benefit.
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi

Thanks for your question

Mt name is Sam and I am one of the UK tax experts here on Just Answer.

There is, yes an online calculator to partially cater for this, on the HMRC website - although sadly it does not also take into account your pension contributions.

But, as the cut off point is £50,000 then if you pay any amount equal to this excess as a start point, this will over your position to one of £50,000 income considered.

To fine tune this you need to consider two other points
1) You would be given 20% tax relief on the contribution so £10,000 additional pension contribution, would equal £12000 and
2) The fact that any income over £42,475 is actually due tax at 40% - so this also applies to the pension contribution too.

But on £61,000 - to hit that sweet spot (as you so perfectly put it)
£7900 contribution would add a further £1580 to gross it up making it £9460 and the further relief due from HMRC (as the whole contribution would be due 40% relief, 20% given at source by the pension provider and 20% you claim from HMRC) would add a further £1580 - totalling £11,060 so ideally you would need to make sure your contribution was around £7900 to that you income would be treated as 49940 leaving the child benefit intact.


Then you have this calculation as a template for next tax year!!

Thanks

Sam



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