Not clear on what I can pay in with the new 50K pension allowance

shinyuk

I am a higher rate taxpayer and am not clear on how to calculate the delta on the 50K allowance.

Currently this tax year I have paid the following NET into my MPP scheme:-
My contribution: 19,000

Plus my Employer contribution of 2,570 which I believe is gross.

Can someone tell me how this tallies against the 50K allowance and what I can further contribute?

JOHNGT

I take it by MPP you mean money purchase plan. A money purchase plan can be either an occupational scheme in which case contributions are usually deducted from your salary before tax which means you get all the tax relief up from and your contribution is gross i.e £19000

If it is a personal pension then the contribution is paid net of basic rate (20%) relief and grossed up by the pension provider who reclaims the 20% from HMRC. In this case the gross contribution would be £23750 based on a net of £19000.

In calculating contributions against the £50K, it is your gross contributions you count (not your net). Your employer conts are also part of the £50K so your total is £21570 or £26320 depending upon what type of scheme you are in.

The £50K starts from 6th April 2011 - so its first tax year of operation is 2011/12. The £50K is measured against pension input periods ending in 2011/12, not the tax year as such. Speak to your scheme or pension provider to find out what the pension input period is - this can be changed for money purchase plans unless the scheme administrator has already changed the pension input period. If the input period ends in 2010/11, the £50K doesn't apply - the current allowance of £255K applies but with severe restrictions for those with taxable income above £130K (called anti-forestalling rules)