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Practice No.

13444

What is adjusted net income?

Adjusted net income is your taxable income less certain tax relief’s, such as

 Trading losses

 Payments to charities made through Gift Aid

 Pension payments paid gross without tax relief

 Pension payments where you get basic rate tax relief but are due relief at higher rate.

Example:

Tom has the following income:

•     Salary of                           £49,500
•     Company car benefit of         £5,895
•     Bank interest                         £350
•     Shares dividends gross            £225

His Total taxable income is therefore  = £55,745

Tom also pays:

• private pension payments without tax relief of £2,475
• Gift Aid donations of £500, these are equal to grossed up payments of £625

Tom’s Adjusted net income is calculated from £55,745 less £2,475 pension payments and

£625 gift aid payments leaving a total of £52,645 which will be used to calculate the High Income Child Benefit Charge.

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Child Benefit -

Adjusted Net Income