Pension & HR Tax

Trumpeter

This tax year I will have a salary of about £49,000 & my tax code is 1038L. Can someone please tell me the optimum amount I can put into a personal pension to reduce/avoid the HR tax bracket. This will be a secondary pension as I already contribute to a company Final Salary scheme.
TIA.

Triumph13

0.8 x (Gross Salary - £31,865 - £10,380 - contributions to occupational scheme)

jem16

Trumpeter wrote: »

This tax year I will have a salary of about £49,000 & my tax code is 1038L. Can someone please tell me the optimum amount I can put into a personal pension to reduce/avoid the HR tax bracket. This will be a secondary pension as I already contribute to a company Final Salary scheme.
TIA.

You would really need to add in any gross savings interest but based on the above figures it would be;

£49,000 minus £31,865 minus £10,385 which is £6750. You would then need to subtract what you pay into your final salary pension and what's left is the gross payment. How much do you pay in to your DB pension?

Once you have that you should pay in the net payment - ie 80% of the gross. So if it had been £6750 you would pay in £5400 and your pension provider would make it up to £6750.

Trumpeter

If I use the figures on this month's payslip & assume them to be 11/12ths of the year end figures, I will finish up (in round figures)

Gross Pay £49210
Taxable Pay £45820
Pension Paid £3390

Any tax due on savings will be fairly small as my wife is a non tax payer & the majority of any tax payable savings are in her name.

jem16

Trumpeter wrote: »

If I use the figures on this month's payslip & assume them to be 11/12ths of the year end figures, I will finish up (in round figures)

Gross Pay £49210
Taxable Pay £45820
Pension Paid £3390

Any tax due on savings will be fairly small as my wife is a non tax payer & the majority of any tax payable savings are in her name.

So a gross payment of £3570 - net payment of £2856.

kidmugsy

jem16 wrote: »

So a gross payment of £3570 - net payment of £2856.

And remember to claim back your own share of the tax relief from HMRC. If you do it by self-assessment, it's the gross contribution
(£3570) that you enter on the form.