Set up new pension and avoid 40% tax bracket help?

kangoora

The above examples assume you have a standard tax code and personal allowance of £10,000 (e.g. Tax code of 1000L). If your allowance is less than this, for example, you get benefits in kind such as private health insurance, you need to add a bit extra to you pension payments.

I'm doing something similar but with mine being a salary sacrifice scheme it works a bit differently.

Personally I would aim to overpay by a few hundred quid to be on the safe side. That way a good overtime month at the end of the year would also be covered.

AlwaysLearnin

mike5678 wrote: »

...I should them claim back £2,027 from the taxman?

Which is conveniently close to the £2880 amount that Dunnit mentioned for your wife....

mike5678

Thanks guys. Timing wise I assume I just need to get the payment in before April and then the reclaim is done in the new tax year once I receive my P60?

I should add I don't currently do a tax return so was planning on phoning them or writing a letter. This doesn't need to be done before April does it? As we wouldn't yet know my final income.

Tango130

I should add I don't currently do a tax return so was planning on phoning them or writing a letter. This doesn't need to be done before April does it? As we wouldn't yet know my final income.

You don't need to ring but can, HMRC were happy with my estimated income and have altered my tax code. You can always ring them again nearer the time. Number I rang was: 0300 200 3310

AlanP_2

Triumph13 wrote: »

The flaw is that the tax reclaim you make ISN'T going into the pension - it's going into your pocket.


If you put in £6 net then it gets grossed up to £7.50 and you get the other £1.50 back meaning you've paid £4.50 net for £7.50 gross.


If you want to put £10 in gross then you have to pay £8 net in. That gets grossed to £10 and you get a tax rebate to bring your net cost to £6.

Thanks.

So if I pay £200 pm into a PP, the provider reclaims £50 pm and we will get the equivalent of £50 pm back through the PAYE system after notifying HMRC making the net payment £150 pm?

Looks like I am going to have to amend my spreadsheet

mike5678

AlanP wrote: »

Thanks.

So if I pay £200 pm into a PP, the provider reclaims £50 pm and we will get the equivalent of £50 pm back through the PAYE system after notifying HMRC making the net payment £150 pm?

Looks like I am going to have to amend my spreadsheet

I think if you pay in £200, that will be topped up to £240, not £250 and you claim back another £40, not £50.

40% of 200 is 80, not 100.

AlanP_2

mike5678 wrote: »

I think if you pay in £200, that will be topped up to £240, not £250 and you claim back another £40, not £50.

40% of 200 is 80, not 100.

Mike - No it will be topped up by £50 (as per the numbers they worked out for you above) i.e. what you pay in is 80% of what goes in overall for BR tax element which is the remaining 20%:

£200 + £50 = £250 @ 80% = £200.

The other 20% (£50) is then claimed via HMRC.


The thing to remember is it you need to get back the tax YOU HAVE ALREADY PAID on the money.

mike5678

I'll get there one day!

AlanP_2

mike5678 wrote: »

I'll get there one day!

If you are like me the problem is "there" will have moved by then :beer: