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  • FIRST POST
    • shaun1952
    • By shaun1952 8th Feb 18, 8:41 PM
    • 28Posts
    • 4Thanks
    shaun1952
    How much does the Government put in
    • #1
    • 8th Feb 18, 8:41 PM
    How much does the Government put in 8th Feb 18 at 8:41 PM
    Could you please tell me how much the government adds to your pension pot if you say add £11000 into your pot yourself , then if you take the £11000 back out the next month how much would i get from the original £11000 ? .

    Many thanks for you help
Page 1
    • xylophone
    • By xylophone 8th Feb 18, 9:31 PM
    • 24,509 Posts
    • 14,361 Thanks
    xylophone
    • #2
    • 8th Feb 18, 9:31 PM
    • #2
    • 8th Feb 18, 9:31 PM
    Do you have relevant earnings of £11,000 in this tax year?

    If so, you could pay £8,800 into the pension and the pension provider would claim tax relief of £2,200.


    If you have relevant earnings of £13,750 in this tax year, you could pay £11,000 into the pension and receive tax relief of £2750.


    Some pension providers will add the tax relief before they have received it from the government but you might have to wait several weeks.
    • shaun1952
    • By shaun1952 8th Feb 18, 9:46 PM
    • 28 Posts
    • 4 Thanks
    shaun1952
    • #3
    • 8th Feb 18, 9:46 PM
    • #3
    • 8th Feb 18, 9:46 PM
    could you explain what Relevant earnings relates to please , is it my salary from my work plus any pension payments I may have coming in ?
    • xylophone
    • By xylophone 8th Feb 18, 10:45 PM
    • 24,509 Posts
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    xylophone
    • #4
    • 8th Feb 18, 10:45 PM
    • #4
    • 8th Feb 18, 10:45 PM
    https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/tax-relief-members-contributions/

    It'ssometimes easier to think about what are not relevant earnings and this includes pension income, dividends and most rental income.

    HMRC define relevant earnings as:

    employment income such as salary, wages, bonus, overtime, commission (providing it is chargeable to tax under Section 7(2) ITEPA 2003)
    income chargeable under Part 2 ITTOIA 2005, that is income derived from the carrying on or exercise of a trade, profession or vocation (whether individually or as a partner acting personally in a partnership)
    income arising from patent rights and treated as earned income under section 833 (5B) ICTA 1988
    general earnings from an overseas Crown employment which are subject to tax in accordance with section 28 of ITEPA 2003
    rental income is generally not relevant earnings but some rental income may be included if it is in respect of UK or EEA furnished holiday lettings business
    • Alexland
    • By Alexland 8th Feb 18, 10:59 PM
    • 1,631 Posts
    • 1,116 Thanks
    Alexland
    • #5
    • 8th Feb 18, 10:59 PM
    • #5
    • 8th Feb 18, 10:59 PM
    Xylophone, what's the protocol on providing forum links to articles written for an advisor audience? Personally I just click through the 'advisor only' warnings on websites to get to the articles as I find them useful but I am always hesitant to provide such links to others.
    • xylophone
    • By xylophone 8th Feb 18, 11:33 PM
    • 24,509 Posts
    • 14,361 Thanks
    xylophone
    • #6
    • 8th Feb 18, 11:33 PM
    • #6
    • 8th Feb 18, 11:33 PM
    providing forum links to articles written for an advisor audience?
    This article didn't come up as "adviser only".

    I don't know if there is a protocol.
    • bob_a_builder
    • By bob_a_builder 8th Feb 18, 11:58 PM
    • 1,545 Posts
    • 736 Thanks
    bob_a_builder
    • #7
    • 8th Feb 18, 11:58 PM
    • #7
    • 8th Feb 18, 11:58 PM
    This article didn't come up as "adviser only".
    That maybe because you have accessed the site before and its stored your response

    But for me, on my 1st use of that site get a warning dialog saying ...

    "Confirm that you're a UK financial adviser
    The information within this website has been approved for UK financial advisers only. If you!!!8217;re NOT a UK financial adviser, please do not view this website as it hasn!!!8217;t been approved for customers.

    If you're not a UK financial adviser, please visit the customer website: pru.co.uk

    By continuing to access this site, you acknowledge that you are a UK financial adviser.
    "

    Hardly fort knox level security, but the user is given some indication about the type of 'advice' provided
    Last edited by bob_a_builder; 09-02-2018 at 12:01 AM.
    • Alexland
    • By Alexland 9th Feb 18, 12:02 AM
    • 1,631 Posts
    • 1,116 Thanks
    Alexland
    • #8
    • 9th Feb 18, 12:02 AM
    • #8
    • 9th Feb 18, 12:02 AM
    I am not saying it is wrong to provide these types of link if they contain relevant and useful information but I have always hesitated incase there's a feeling that providing information written for a more informed audience might be misunderstood by the average retail investor?
    • HappyHarry
    • By HappyHarry 9th Feb 18, 12:06 AM
    • 548 Posts
    • 810 Thanks
    HappyHarry
    • #9
    • 9th Feb 18, 12:06 AM
    • #9
    • 9th Feb 18, 12:06 AM
    That maybe because you have accessed the site before and its stored your response

    But for me, on my 1st use of that site get a warning dialog saying ...

    "Confirm that you're a UK financial adviser
    The information within this website has been approved for UK financial advisers only. If you!!!8217;re NOT a UK financial adviser, please do not view this website as it hasn!!!8217;t been approved for customers.

    If you're not a UK financial adviser, please visit the customer website: pru.co.uk

    By continuing to access this site, you acknowledge that you are a UK financial adviser.
    "

    Hardly fort knox level security, but the user is given some indication about the type of 'advice' provided
    Originally posted by bob_a_builder
    If the information on those pages is wrong, and you act on it and lose out, then the provider will not be liable.

    The information on those pages will not necessarily have been approved by the providers’ compliance department as appropriate for individual investors.

    Additionally, often the information in those pages is technical and not overly customer friendly, and the provider won’t want to keep dealing with telephone enquiries saying “what does this mean on your web page?”
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
    • Tom99
    • By Tom99 9th Feb 18, 12:11 AM
    • 1,279 Posts
    • 818 Thanks
    Tom99
    That maybe because you have accessed the site before and its stored your response

    But for me, on my 1st use of that site get a warning dialog saying ...

    "Confirm that you're a UK financial adviser
    The information within this website has been approved for UK financial advisers only. If you!!!8217;re NOT a UK financial adviser, please do not view this website as it hasn!!!8217;t been approved for customers.

    If you're not a UK financial adviser, please visit the customer website: pru.co.uk

    By continuing to access this site, you acknowledge that you are a UK financial adviser.
    "

    Hardly fort knox level security, but the user is given some indication about the type of 'advice' provided
    Originally posted by bob_a_builder
    I get a semi transparent grey filter over that web-page and cannot view it at all. No questions about whether I am a financial adviser.
    • dunstonh
    • By dunstonh 9th Feb 18, 12:12 AM
    • 91,098 Posts
    • 58,112 Thanks
    dunstonh
    Hardly fort knox level security, but the user is given some indication about the type of 'advice' provided
    It's more to do with the liability of the info they give. i.e. consumers act on it at your peril.



    Contributions are considered gross. i.e if you put in £11,000 then you write the cheque for £8800. You would need a salary or self-employed income of £11,000 gross (exceptions apply).
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • xylophone
    • By xylophone 9th Feb 18, 10:20 AM
    • 24,509 Posts
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    xylophone
    From the horse's (HMRC's) mouth........and entirely without filter, grey or otherwise....


    https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100

    "Relevant UK earnings means any one or more of the following types of income:

    employment income, such as: pay, wages, bonus, overtime, or commission - but only if taxable under Section 7(2) Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) - so including:

    the part of a redundancy payment above the £30,000 tax exempt threshold in section 403(1) ITEPA 2003. The first £30,000 of the redundancy payment is not classed as employment income so does not count here. But any amount on top of the £30,000 threshold is classed as employment income and so it is also relevant UK earnings. In making this analysis, care is required not to confuse usual wages or pay, pay in lieu of notice or holiday pay, with the redundancy payment when such elements are bundled into a final payment.
    benefits in kind which are taxable (applies to employees earning over £8,500, and to directors)
    profit related pay (including the part which is not taxable)
    Statutory Sick Pay (SSP) and Statutory Maternity Pay (SMP) if paid by the employer and taxable under Section 7(2) ITEPA 2003
    Permanent Health Insurance (PHI) payments paid by the employer whilst you are still in employment
    pay paid by way of Government Securities
    pay in the form of units in an authorised unit trust if taxed on the person receiving it
    amounts taken off pay to buy partnership shares in a share incentive plan in line with paragraph 83 of Schedule 8 of Finance Act 2000
    income from a trade, profession or vocation that is chargeable under Part 2 Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005)(applies if the activity is conducted individually or as a partner acting personally in a partnership)
    income from a UK and/or EEA furnished holiday lettings business, which is chargeable under Part 3 ITTOIA 2005 (applies if the business is conducted individually, or as a partner acting personally in a partnership)

    a UK furnished holiday lettings business means a UK property business so far as it consists of the commercial letting of furnished holiday accommodation (Chapter 6 Part 3 ITTOIA 2005).
    an EEA furnished holiday lettings business means an overseas property business so far as it consists of the commercial letting of furnished holiday accommodation (Chapter 6 Part 3 ITTOIA 2005) in one or more EEA states.
    in either case if there is a letting of accommodation only part of which is holiday accommodation, a just and reasonable apportionment is to be made to determine the amount of the income from that business that is to be counted.
    patent income, where the individual alone or jointly devised the invention for which the patent in question is granted, in the following categories:

    royalties or other sums paid regarding patent use and charged to tax under section 579 ITTOIA 2005 (intellectual property)
    amounts on which tax is payable under section 587 ITTOIA 2005 (sales of patent rights) or section 593 ITTOIA 2005 (death of seller of patent rights), or
    amounts on which tax is payable under section 472(5) of the Capital Allowances Act 2001 (balancing charge) or paragraph 100 of schedule 3 to that Act (balancing charges)

    Relevant UK earnings are to be treated as not being chargeable to income tax if by virtue of section 2(1) Taxation (International and Other Provisions) Act 2010 (double taxation arrangements), they are not taxable in the United Kingdom. To the extent that they are not chargeable in this way, they will also not count towards the annual limit for relief explained in Annual limits above.

    For the avoidance of doubt a pension is not classed as earnings and cannot be included in the definition of relevant UK earnings."

    I think that the man from the Pru may have consulted the manual.....
    • Mnd
    • By Mnd 9th Feb 18, 1:33 PM
    • 376 Posts
    • 404 Thanks
    Mnd
    Back to the original point, if the op has earnings to enable putting 11000 in as suggested, then takes it out next month, surely there will be a tax amount to be considered. The 25% will be the only bit that will be tax free.
    Also taking the original sum back out which is taxable will bring the MPAA factor into play for future years.
    Sorry if I'm confused and got this wrong
    • xylophone
    • By xylophone 9th Feb 18, 1:47 PM
    • 24,509 Posts
    • 14,361 Thanks
    xylophone
    Back to the original point, if the op has earnings to enable putting 11000 in as suggested, then takes it out next month, surely there will be a tax amount to be considered. The 25% will be the only bit that will be tax free.
    Also taking the original sum back out which is taxable will bring the MPAA factor into play for future years.
    There are tax considerations but how much ends up being subject to tax will depend on an individual's situation.

    Let's suppose that an individual has enough relevant earnings in a certain tax year to make a contribution of £11,000 but in the following tax year has no earnings or any other taxable income.

    He could take his PCLS and depending on the level of the personal allowance, draw down the balance and have no tax to pay (although the provider might deduct it, necessitating a reclaim).

    With regard to MPAA

    http://adviser.royallondon.com/news/pensions/2017/april/what-triggers-the-mpaa/
    • Mnd
    • By Mnd 9th Feb 18, 1:53 PM
    • 376 Posts
    • 404 Thanks
    Mnd
    I agree that if you pay in 1 tax year, then stop working it is possible, I just got the impression that the OP was looking for a quick couple of grand and take both the tax rebate and the 11000 out next month.
    That's what they need to think about
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