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  • FIRST POST
    • AnotherJoe
    • By AnotherJoe 12th Jan 18, 4:13 PM
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    AnotherJoe
    Is NI included in how much i can pay into my pension?
    • #1
    • 12th Jan 18, 4:13 PM
    Is NI included in how much i can pay into my pension? 12th Jan 18 at 4:13 PM
    Finding myself slightly confused so looking for help .
    I'm looking to pay as much as possible as i can into my pension this year. I have retired and wont be earning any more, ever. I'm over 55 so whatever i pay in I can access immediately and i wont be drawing any pension until SP kicks in so i have a few years i can maximise tax relief.

    I recall that you have to omit NI when doing the calculation but not sure.

    Rough numbers, rounded to make it simple.

    Amount earned £25k
    Amount already put into pension by me £7000
    NI paid £1700

    Is the calculation (25000 -7000 -1700) * 0.8 or (25000 -7000) * 0.8

    .. or something else.

    have looked but cant find any example calculations.

    Thanks
Page 1
    • Linton
    • By Linton 12th Jan 18, 4:23 PM
    • 8,850 Posts
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    Linton
    • #2
    • 12th Jan 18, 4:23 PM
    • #2
    • 12th Jan 18, 4:23 PM
    NI has nothing to do with pension contribution calculations.
    • TcpnT
    • By TcpnT 12th Jan 18, 4:25 PM
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    TcpnT
    • #3
    • 12th Jan 18, 4:25 PM
    • #3
    • 12th Jan 18, 4:25 PM
    NI is irrelevant for this calculation.

    Assuming that the £7000 is the gross contribution after receiving 20% tax relief then you second calculation looks correct to me
    • AnotherJoe
    • By AnotherJoe 12th Jan 18, 4:29 PM
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    AnotherJoe
    • #4
    • 12th Jan 18, 4:29 PM
    • #4
    • 12th Jan 18, 4:29 PM
    Excellent. Thanks folks. I'm sure i read that here somewhere but then again after retiring maybe my brain has turned to mush

    And £7k was what i actually paid in, eg before any tax.
    • redux
    • By redux 12th Jan 18, 4:36 PM
    • 17,797 Posts
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    redux
    • #5
    • 12th Jan 18, 4:36 PM
    • #5
    • 12th Jan 18, 4:36 PM
    If you can afford it you can pay in to make the whole £25000, in other words pay £20,000 tax relief £5000. This gets you tax relief even on the zero band tax allowance, gaining £2300.

    Following years, £2880 net contribution for £3600 (surely it's about time this was increased)
    • Dazed and confused
    • By Dazed and confused 12th Jan 18, 5:15 PM
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    Dazed and confused
    • #6
    • 12th Jan 18, 5:15 PM
    • #6
    • 12th Jan 18, 5:15 PM
    Is the 25k you refer to all salary paid after 5 April 2017?
    • AnotherJoe
    • By AnotherJoe 12th Jan 18, 5:35 PM
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    AnotherJoe
    • #7
    • 12th Jan 18, 5:35 PM
    • #7
    • 12th Jan 18, 5:35 PM
    Is the 25k you refer to all salary paid after 5 April 2017?
    Originally posted by Dazed and confused
    Sorry yes it is i should have made that clear. All this current tax year.
    • AnotherJoe
    • By AnotherJoe 12th Jan 18, 5:36 PM
    • 7,892 Posts
    • 8,485 Thanks
    AnotherJoe
    • #8
    • 12th Jan 18, 5:36 PM
    • #8
    • 12th Jan 18, 5:36 PM
    If you can afford it you can pay in to make the whole £25000, in other words pay £20,000 tax relief £5000. This gets you tax relief even on the zero band tax allowance, gaining £2300.

    Following years, £2880 net contribution for £3600 (surely it's about time this was increased)
    Originally posted by redux
    I dont see how i can do that ? I've already paid in £7k into my pension, so I'd be paying in more than i earned.
    • BoGoF
    • By BoGoF 12th Jan 18, 5:39 PM
    • 2,838 Posts
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    BoGoF
    • #9
    • 12th Jan 18, 5:39 PM
    • #9
    • 12th Jan 18, 5:39 PM
    How was the £7000 paid? Into what type of pension?
    • Dazed and confused
    • By Dazed and confused 12th Jan 18, 5:56 PM
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    Dazed and confused
    I think redux probably means make extra payments to make it up to £25000 (gross).

    Don't forget on that level of income paying into a personal pension/SIPP won't actually save you any personal income tax but you will of course get the basic rate tax relief added to your pension fund (which I think is what your objective is).
    • AnotherJoe
    • By AnotherJoe 12th Jan 18, 8:24 PM
    • 7,892 Posts
    • 8,485 Thanks
    AnotherJoe
    How was the £7000 paid? Into what type of pension?
    Originally posted by BoGoF
    The £7k was into an employers s pension prior to tax
    • AnotherJoe
    • By AnotherJoe 12th Jan 18, 8:40 PM
    • 7,892 Posts
    • 8,485 Thanks
    AnotherJoe
    I think redux probably means make extra payments to make it up to £25000 (gross).

    Don't forget on that level of income paying into a personal pension/SIPP won't actually save you any personal income tax but you will of course get the basic rate tax relief added to your pension fund (which I think is what your objective is).
    Originally posted by Dazed and confused
    Yes what Iím trying to do with that calculation of (£25k - £7k) * 0.8

    As you say Iíll get the 20% tax uplift. The plan is then to withdraw it all over the next couple of years when Iíll have no income.
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