AVC/Pension contributions and PAYE

scottiescott

I will check my payslips tonight for gross pay and taxable pay.
Thanks in the meantime.

MRMX9

I have an AVC linked to my employers final salary scheme

The contributions are deducted gross from my salary before tax and passed to the AVC provider – so I get tax relief at source.

So say I pay £100 a month into the AVC - £40 of that is tax relief as I am a higher rate taxpayer. If I didn’t pay into the AVC and received the money in my pay packet I would only get £60 (i.e. 40% income tax would be applied).

So it does depend on the arrangement your employer has in place.

Bootsox

MRMX9 wrote: »

I have an AVC linked to my employers final salary scheme

The contributions are deducted gross from my salary before tax and passed to the AVC provider – so I get tax relief at source.

So say I pay £100 a month into the AVC - £40 of that is tax relief as I am a higher rate taxpayer. If I didn’t pay into the AVC and received the money in my pay packet I would only get £60 (i.e. 40% income tax would be applied).

So it does depend on the arrangement your employer has in place.

Are you benefitting from salary sacrifice, i.e. saving 40% income tax and 2% NI?

MARTYM8`

Bootsox wrote: »

Are you benefitting from salary sacrifice, i.e. saving 40% income tax and 2% NI?

No its not salary sacrifice.

As an illustration I increased my AVC monthly payment a few months ago by £75. My income tax paid compared to the previous month fell by £30 and my net pay by only £45. So I got tax relief at 40% before the extra £75 was paid to the AVC pension provider (i.e. the £75 contribution paid to them only cost me £45).

So in my case the relief is done at source - and I don't need to claim the extra 20% relief back from HMRC via a tax return.

That differs from an old Stakeholder I have where you did have to claim the extra 20% back via an adjustment to your personal allowance - as the pension provider only got the 20% from HMRC invested in the policy.

rpc

MRMX9 wrote: »

The contributions are deducted gross from my salary before tax and passed to the AVC provider – so I get tax relief at source.

Careful - that's net pay, not relief at source.

Seems bass ackwards to me aswell.