How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Sam Your Own Question
Sam, Accountant
Category: Tax
Satisfied Customers: 14164
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
Type Your Tax Question Here...
Sam is online now

My salary last year because of an unexpected bonus took my

Customer Question

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: 4 years ago.
Category: Tax
Expert:  Sam replied 4 years ago.

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!!