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    • YellowSock
    • By YellowSock 14th Feb 18, 6:37 PM
    • 32Posts
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    YellowSock
    Max. personal contribution into personal pension
    • #1
    • 14th Feb 18, 6:37 PM
    Max. personal contribution into personal pension 14th Feb 18 at 6:37 PM
    If someone gets a taxable salary of lets say £10,000 (as later shown after the end of the tax year on his/her P60) can he/she transfer £10,000 into his/her pension?

    My (possibly wrong) understanding so far was yes he/she can. But I heard recently that only £10,000 * 80% = £8,000 can be transferred.

    It would be great if someone could clarify this - it has quite an impact on me.

    Thank you!
    Last edited by YellowSock; 14-02-2018 at 8:14 PM.
Page 1
    • Dazed and confused
    • By Dazed and confused 14th Feb 18, 6:46 PM
    • 2,182 Posts
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    Dazed and confused
    • #2
    • 14th Feb 18, 6:46 PM
    • #2
    • 14th Feb 18, 6:46 PM
    What do you mean by into this pension?

    If you are talking about a personal pension or SIPP then the maximum contribution you can make would be £8,000.

    The pension company then claims basic rate (20%) tax relief on your behalf from HMRC and adds this to the pension fund so you end up with £10,000 in the pension but you have only paid £8,000
    Last edited by Dazed and confused; 14-02-2018 at 6:48 PM.
    • dunstonh
    • By dunstonh 14th Feb 18, 6:56 PM
    • 91,051 Posts
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    dunstonh
    • #3
    • 14th Feb 18, 6:56 PM
    • #3
    • 14th Feb 18, 6:56 PM
    But I heard recently that only £10,000 * 80% = £8,000 can be transferred.
    Pension contributions are treated as gross. Just as your income is.

    Wherever you read that either showed it incorrectly as net or you misunderstood.

    If you earn £10k gross then you can pay £10k gross into the pension.
    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 14th Feb 18, 7:19 PM
    • 24,478 Posts
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    xylophone
    • #4
    • 14th Feb 18, 7:19 PM
    • #4
    • 14th Feb 18, 7:19 PM
    If you earn £10k gross then you can pay £10k gross into the pension.
    If the person with relevant earnings of £10,000 in a tax year is contributing to a SIPP/personal pension/stakeholder, then he can make a net payment of up to £8000 to the provider and the provider will claim tax relief up to £2000 making the gross contribution up to £10,000.
    • YellowSock
    • By YellowSock 14th Feb 18, 8:11 PM
    • 32 Posts
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    YellowSock
    • #5
    • 14th Feb 18, 8:11 PM
    • #5
    • 14th Feb 18, 8:11 PM
    Thank you all for your reply. Sorry for the truncated title - I have shortened it now.

    Yes I was talking about a SIPP.

    So it's really only £8000. This means I have done it wrong in the last 2 years as I was transferring in the gross amount as per P60. Will this now incur a tax penalty or can my pension provider still correct this?
    • xylophone
    • By xylophone 14th Feb 18, 9:05 PM
    • 24,478 Posts
    • 14,330 Thanks
    xylophone
    • #6
    • 14th Feb 18, 9:05 PM
    • #6
    • 14th Feb 18, 9:05 PM
    Contact your SIPP provider and explain what has happened.
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