{"id":1466,"date":"2014-08-13T15:33:30","date_gmt":"2014-08-13T14:33:30","guid":{"rendered":"http:\/\/www.pmabookkeeping.co.uk\/?p=1466"},"modified":"2014-08-13T15:33:30","modified_gmt":"2014-08-13T14:33:30","slug":"adjusted-net-income-2","status":"publish","type":"post","link":"http:\/\/www.pmabookkeeping.co.uk\/index.php\/adjusted-net-income-2\/","title":{"rendered":"Adjusted net income"},"content":{"rendered":"<div>\n<div>\n<div>\n<p>Work out adjusted net income to know how much tax I need to pay.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<div>\n<div>\n<nav id=\"page-navigation\">\n<h1>Contents<\/h1>\n<nav role=\"navigation\">\n<ol id=\"document_sections\">\n<li><a href=\"https:\/\/www.gov.uk\/adjusted-net-income#who-is-affected-by-adjusted-net-income\">Who is affected by adjusted net income?<\/a><\/li>\n<li><a href=\"https:\/\/www.gov.uk\/adjusted-net-income#what-is-adjusted-net-income\">What is adjusted net income?<\/a><\/li>\n<li><a href=\"https:\/\/www.gov.uk\/adjusted-net-income#work-out-your-adjusted-net-income\">Work out your adjusted net income<\/a><\/li>\n<li><a href=\"https:\/\/www.gov.uk\/adjusted-net-income#adjusted-net-income---examples\">Adjusted net income &#8211; examples<\/a><\/li>\n<li><a href=\"https:\/\/www.gov.uk\/adjusted-net-income#more-like-this\">See more like this<\/a><\/li>\n<\/ol>\n<\/nav>\n<\/nav>\n<\/div>\n<\/div>\n<div>\n<div>\n<article>\n<div>\n<div>\n<h2 id=\"who-is-affected-by-adjusted-net-income\">Who is affected by adjusted net income?<\/h2>\n<p>Your adjusted net income will affect your tax if any of the following apply. You are liable to the:<\/p>\n<ul>\n<li>income-related reduction to the Higher Personal Allowances &#8211; where you born before 6 April 1948 and have an adjusted net income of over \u00a327,000 (tax year 2014 to 2015)<\/li>\n<li>income-related reduction to the <a href=\"https:\/\/www.gov.uk\/income-tax-rates\/personal-allowances\">Personal Allowance<\/a> &#8211; where you have an adjusted net income over \u00a3100,000 (regardless of your date of birth)<\/li>\n<li><a href=\"https:\/\/www.gov.uk\/child-benefit-tax-charge\">High Income Child Benefit charge<\/a> &#8211; where you have an adjusted net income above \u00a350,000<\/li>\n<\/ul>\n<h2 id=\"what-is-adjusted-net-income\">What is adjusted net income?<\/h2>\n<p>Adjusted net income is total taxable income less certain tax reliefs, for example for:<\/p>\n<ul>\n<li>trading losses<\/li>\n<li>donations made to charities through Gift Aid<\/li>\n<li>pension contributions paid gross (before tax relief)<\/li>\n<li>pension contributions where your pension provider has already given you tax relief at the basic rate<\/li>\n<\/ul>\n<h2 id=\"work-out-your-adjusted-net-income\">Work out your adjusted net income<\/h2>\n<p>Work out your adjusted net income by following steps 1 to 4 below.<\/p>\n<h4 id=\"step-1---work-out-your-net-income\">Step 1 &#8211; work out your \u2018net income\u2019<\/h4>\n<p>Add up your <a href=\"https:\/\/www.gov.uk\/income-tax\/overview\">taxable income<\/a>.<\/p>\n<p>Include things like:<\/p>\n<ul>\n<li>income from employment (including any company benefits)<\/li>\n<li>profits from self-employment<\/li>\n<li>taxable social security benefits<\/li>\n<li>pensions (including the State Pension)<\/li>\n<li>savings, dividend and rental income<\/li>\n<\/ul>\n<p>Take off any tax reliefs that apply like:<\/p>\n<ul>\n<li>payments made gross to <a href=\"https:\/\/www.gov.uk\/income-tax-reliefs\/pension-contributions-tax-relief\">pension schemes &#8211; those that have been made without tax relief<\/a><\/li>\n<li>trading losses, for example trade loss relief or property loss relief<\/li>\n<\/ul>\n<p>This is your \u2018net income\u2019<\/p>\n<p>Your net income is then adjusted &#8211; steps 2 to 4 below.<\/p>\n<h4 id=\"step-2---take-off-gift-aid-donations\">Step 2 &#8211; take off Gift Aid donations<\/h4>\n<p>If you made a <a href=\"https:\/\/www.gov.uk\/income-tax-reliefs\/charity-donations-tax-relief\">Gift Aid donation<\/a>, take off the \u2018grossed-up\u2019 amount &#8211; what you paid plus the basic rate of tax.<\/p>\n<p>So, for every \u00a31 of Gift Aid donations you made, take \u00a31.25 from your net income.<\/p>\n<h4 id=\"step-3---take-off-pension-contributions\">Step 3 &#8211; take off pension contributions<\/h4>\n<p>If you made a contribution to a <a href=\"https:\/\/www.gov.uk\/income-tax-reliefs\/pension-contributions-tax-relief\">pension scheme where your pension provider has already given you tax relief<\/a> at basic rate, take off the \u2018grossed-up\u2019 amount &#8211; what you paid plus the basic rate of tax.<\/p>\n<p>So, for every \u00a31 of pension contribution you made, take \u00a31.25 from your net income.<\/p>\n<h4 id=\"step-4---add-back-tax-relief-for-payments-to-trade-unions-or-police-organisations\">Step 4 &#8211; add back tax relief for payments to trade unions or police organisations<\/h4>\n<p>Tax relief of up to \u00a3100 is available if you make payments to a trade union or police organisation for superannuation, life insurance or funeral benefits.<\/p>\n<p>If you took off an amount for this type of payment at step 1, add it back.<\/p>\n<h2 id=\"adjusted-net-income---examples\">Adjusted net income &#8211; examples<\/h2>\n<h4 id=\"charles---born-between-6-april-1938-and-5-april-1948-and-income-above-27000-income-related-reduction-to-personal-allowance\">Charles &#8211; born between 6 April 1938 and 5 April 1948 and income above \u00a327,000, income-related reduction to Personal Allowance<\/h4>\n<p>For 2014 to 2015, Charles\u2019 total taxable income is \u00a340,000, made up of:<\/p>\n<ul>\n<li>pensions (including State Pension) \u00a325,000<\/li>\n<li>bank interest \u00a310,000<\/li>\n<li>dividends \u00a3 5,000<\/li>\n<\/ul>\n<p>There are no further adjustments to Charles\u2019 total income, so this is his net income.<\/p>\n<p>Charles makes Gift Aid donations of \u00a31,000. He can take \u00a31,250 off his net income, \u00a31,000 plus \u00a3250, the value of the basic rate tax.<\/p>\n<p>Charles\u2019 adjusted net income is \u00a338,750 (\u00a340,000 less \u00a31,250).<\/p>\n<p>Charles\u2019 adjusted net income is used to work out his Personal Allowance.<\/p>\n<h4 id=\"bill---income-related-reduction-to-personal-allowance-income-over-100000\">Bill &#8211; income-related reduction to Personal Allowance, income over \u00a3100,000<\/h4>\n<p>For 2014 to 2015 Bill\u2019s taxable income is \u00a3115,000, made up of:<\/p>\n<ul>\n<li>income from self-employment \u00a385,000<\/li>\n<li>income from property \u00a320,000<\/li>\n<li>bank interest \u00a310,000<\/li>\n<\/ul>\n<p>Bill makes private pension contributions without tax relief of \u00a310,000.<\/p>\n<p>Bill\u2019s net income is \u00a3105,000 (\u00a3115,000 less \u00a310,000).<\/p>\n<p>There are no further adjustments to Bill\u2019s net income, so this is his adjusted net income.<\/p>\n<p>Bill\u2019s adjusted net income is used to work out his Personal Allowance.<\/p>\n<h4 id=\"clara---high-income-child-benefit-charge\">Clara &#8211; High Income Child Benefit charge<\/h4>\n<p>Clara\u2019s total taxable income is \u00a360,000, made up of:<\/p>\n<ul>\n<li>Income from employment \u00a355,000<\/li>\n<li>Bank interest \u00a35,000<\/li>\n<\/ul>\n<p>Clara makes private pension contributions without tax relief of \u00a34,750.<\/p>\n<p>Her net income is \u00a355,250 (\u00a360,000 less \u00a34,750).<\/p>\n<p>Clara makes Gift Aid donations of \u00a31,000. She can take \u00a31,250 off her net income, \u00a31,000 plus \u00a3250, the value of the basic rate tax.<\/p>\n<p>Clara\u2019s adjusted net income is \u00a354,000 (\u00a355,250 less \u00a31,250).<\/p>\n<p>Clara\u2019s adjusted net income is used to work out her <a href=\"https:\/\/www.gov.uk\/child-benefit-tax-charge\">High Income Child Benefit charge<\/a>.<\/p>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Work out adjusted net income to know how much tax I need to pay. Contents Who is affected by adjusted net income? What is adjusted net income? Work out your adjusted net income Adjusted net income &#8211; examples See more&hellip; <\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[],"class_list":["post-1466","post","type-post","status-publish","format-standard","hentry","category-latest-news"],"_links":{"self":[{"href":"http:\/\/www.pmabookkeeping.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/1466"}],"collection":[{"href":"http:\/\/www.pmabookkeeping.co.uk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.pmabookkeeping.co.uk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.pmabookkeeping.co.uk\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/www.pmabookkeeping.co.uk\/index.php\/wp-json\/wp\/v2\/comments?post=1466"}],"version-history":[{"count":2,"href":"http:\/\/www.pmabookkeeping.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/1466\/revisions"}],"predecessor-version":[{"id":1468,"href":"http:\/\/www.pmabookkeeping.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/1466\/revisions\/1468"}],"wp:attachment":[{"href":"http:\/\/www.pmabookkeeping.co.uk\/index.php\/wp-json\/wp\/v2\/media?parent=1466"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.pmabookkeeping.co.uk\/index.php\/wp-json\/wp\/v2\/categories?post=1466"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.pmabookkeeping.co.uk\/index.php\/wp-json\/wp\/v2\/tags?post=1466"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}