SIPP and Tax

madeinireland_2

Apologies as I'm sure this sort of question has been asked before - I did it all last year but my mind has gone blank and I want to be certain.

I have calculated that in order to use my full annual allowance including carry forward I can contribute £32k to my SIPP.

Just in case my calculations are wrong I would like to make an approximate £30k contribution. I will earn about £72k by end of March.

I presume I can make a payment of £24k to my pension provider and they will gross it up to £30k and that I would claim the other 20% with a tax return.

What would that do to my effective salary for child benefit etc - would it make it £48k, £42k or £36k ?

What figure is used as my pension contribution £24k, 30 or 36 against the annual allowance ?

Also what would happen if I exceeded my annual allowance as a result of miscalculation ?

Thanks...

jem16

madeinireland wrote: »

What would that do to my effective salary for child benefit etc - would it make it £48k, £42k or £36k ?

£42k

What figure is used as my pension contribution £24k, 30 or 36 against the annual allowance ?

£30k. It's always the gross amount that's paid into the pension that counts.

Also what would happen if I exceeded my annual allowance as a result of miscalculation ?

Thanks...

There would be a tax charge for contributions in excess of the annual allowance.

The tax charge applies to the pension savings in excess of the annual allowance. The amount of the charge is intended to reverse the tax relief on the excess savings. The tax rate will be 20%, 40% or 45% depending on the member's earnings.

mike5678

A question on this regarding the £50-60k child benefit bracket. I understood that this would only work if paid into the pension through a salary sacrifice scheme so that you're never actually paid the money?

I'm in a similar situation and am going to pay a lump sum into a private pension that I set up in order to bring me below the 40% bracket, but didn't think it would help me obtain child benefit? Or will it? We are expecting our first child this summer so no idea really.

jem16

mike5678 wrote: »

I'm in a similar situation and am going to pay a lump sum into a private pension that I set up in order to bring me below the 40% bracket, but didn't think it would help me obtain child benefit? Or will it? We are expecting our first child this summer so no idea really.

Any pension will do as it's your net adjusted income that matters.