SIPP to reduce tax liability on 100K+ earnings

BananaRepublic

I'd definitely avoid tradng in shares unless you really do know what you are doing. Leave it to the experts, which have reduced trading fees. Buy a fund, as others have said, much safer, spreads the risk, and much less work for you.

grey_gym_sock

whist wrote: »

Does anyone know of a website or somewhere I can find a calculator to work out how much I have to put into pension to reduce the liability. For example, if say I earn 115000 in the current tax year and I want to know exactly how much to put in pension to get back down to 100K. I understand this is not as straight forward as 15K. Looks like the government will automatically top up by 20% and I can claim tax relief of some sort in my self assessment at a later date. So if I were top open a SIPP tomorrow for arguments sake, do I pay in 12K or some other amount. Would be good if I can find somewhere to plug in actual numbers once I have added up all my income.
Also do I use my full salary before pension payments and tax and NI deductions to calculate the total income for tax purposes?

you use gross salary, i.e. don't deduct income tax or NI, but do deduct your employee pension contributions.

also, add in any other taxable income you may have.

and deduct the value of any gift aid donations to charities (i.e. 1.25X the amount you've directly paid using gift aid).

then if you get e.g. £115,000, what you need to pay directly into a SIPP is 80% of the excess over £100,000, e.g. £12,000. then £3,000 will automatically be added to the SIPP by HMRC. and you can reclaim the rest from HMRC.