Paying Into Pension To Keep Basic Rate Tax Payer

ChloeRadshaw

I decided that I want to put money into my pension and I have just found out that doing this through self sacrifise is tax efficent

In simple terms my tax code is 603L, I ve just started a job paying 50K and want to pay anything which makes me a higher rate tax payer into my pension.

Does anyone know at what rate higher rate tax starts? I think is 40K....

If thats the case then can I just do 10k/12monhs and use that as a monthly contribution?

Will that work as I have just started at my job

turbobob

£34800 is the current high rate tax band, and standard personal allowance is £6035. So if I understand correctly £40,835 would be the point at which you become a higher rate payer.

IPP-Believer

yes thats right.

dont forget you will get 40% tax relief on your pension contributions as long as you stay a 40% tax payer. Drop to a basic rate tax payer and your tax relief halves as well.

Is there a company pension?

ChloeRadshaw

Yes there is a company pension but I d like to top up myself over and above this.

I d like to pay into pension without having to go the revenue and ask for tax back as its too much hasle

My tax code is 603L - If I salary sacrifise 800 a month will this achieve my objectives of keeping to a minimum tax band?

Thanks

IPP-Believer

It would in theory.

You should find out if there is an adviser who set up the pension that can speak to you and also find out if your employer will agree.

Depending on the type of scheme you might not need to make a return to the revenue to claim your tax back.

Its a complicated area and you will need to make sure you really are benefitting from doing it.

Day_Trader

Also remember that salary sacrifice is as it says so will reduce your perceived salary - i.e. you can, at present, declare your salary to be £50k p.a. for loans mortgages etc but by sacrificing £800 per month you are reducing your salary to £40,400.