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AVC/SIPP Contribution Calculation
tigerspill
Posts: 954 Forumite
Hi Folks,
I hope someone can help me with some maths.
If my earnings are such that I am paying higher rate tax on £30,000 of my earnings. I want to pay into an AVC/SIPP this financial year so I am not paying any HRT.
Do I pay £24,000 from my net cash (i.e. write a cheque)?
I think what happens is the AVC/SIPP would add the basic rate tax on of £6,000 bringing the total in the SIPP/AVC to £30,000.
Then I would get £6000 back through my SA tax return (or call them specifically).
The result is that I paid £18,000 from net cash, and have £30,000 value in the AVC/SIPP.
Have I got these numbers correct?
I hope someone can help me with some maths.
If my earnings are such that I am paying higher rate tax on £30,000 of my earnings. I want to pay into an AVC/SIPP this financial year so I am not paying any HRT.
Do I pay £24,000 from my net cash (i.e. write a cheque)?
I think what happens is the AVC/SIPP would add the basic rate tax on of £6,000 bringing the total in the SIPP/AVC to £30,000.
Then I would get £6000 back through my SA tax return (or call them specifically).
The result is that I paid £18,000 from net cash, and have £30,000 value in the AVC/SIPP.
Have I got these numbers correct?
0
Comments
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Spot on. With an AVC the other option may be that they deduct £2,500 a month from your gross pay before tax if your employer lets you make AVCs in this way. Even better if they let you salary sacrifice to save the NI as well.0
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Spot on. With an AVC the other option may be that they deduct £2,500 a month from your gross pay before tax if your employer lets you make AVCs in this way. Even better if they let you salary sacrifice to save the NI as well.
I agree and will do this.
Problem is we are near the end of the financial year and I want to do this before the end of March and there aren't enough months left for salary sacrifice.0 -
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