employed 40% tax bracket 7

andy.pandy

I am an employee working for a company and contributing 10% of my monthly salary to the private company pension-they contribute 5%. I get 48k p.a.

My understanding is that its tax efficient for me to pay more into the pension as it has a better advantage becausebi am well into that 40% tax bracket. Do i need to let HMRC know i am doing this or is this all taken into account my by employer at source?

What sort of percentage do i need to contribute to make maximum tax gain.
? ......obviously i would like to put as much as i can afford

[Deleted User]

You don't indicate whether you are in receipt of any benefits which may increase your 'income' above the £48000 or if the pension is deducted from your gross salary.

If no benefits and it is deducted from your gross salary an increase in your pension contribution to 12% will bring your taxable salary down to £42240 which would make you just under the basic rate threshold of £42385.

CLAPTON

andy.pandy wrote: »

I am an employee working for a company and contributing 10% of my monthly salary to the private company pension-they contribute 5%. I get 48k p.a.

My understanding is that its tax efficient for me to pay more into the pension as it has a better advantage becausebi am well into that 40% tax bracket. Do i need to let HMRC know i am doing this or is this all taken into account my by employer at source?

What sort of percentage do i need to contribute to make maximum tax gain.
? ......obviously i would like to put as much as i can afford

if you pension is deducted from salary before tax then you don't need to tell HMRC

if your pension is deducted after tax then you do need to tell HMRC

the actual amount you need to pay to avoid 40% tax depends upon whether its deducted from gross or net salary

andy.pandy

CLAPTON wrote: »

if you pension is deducted from salary before tax then you don't need to tell HMRC

if your pension is deducted after tax then you do need to tell HMRC

the actual amount you need to pay to avoid 40% tax depends upon whether its deducted from gross or net salary

Might sound like a silly question, but how can i tell?
Looking at my last wage slip on the left panel it shows my salary and uplift -forgot about that, so i actually get 51,120 p.a gross. On the right are deductions: paye, ni, employees pension & health deductions (forgot about that too).
How can i tell, there are some cumalive figures at the bottom for this period and ytd.

Darksparkle

Does payslip show gross pay and taxable pay separately?

Eg gross £4250, taxable pay £3825, pension £425

agrinnall

Does your company pension allow you to make higher contributions? If not then you'd need to investigate alternative additional pension provision.

andy.pandy

Darksparkle wrote: »

Does payslip show gross pay and taxable pay separately?

Eg gross £4250, taxable pay £3825, pension £425

It shows for this period:
total gross pay: 5635.50 (includes some overtime),
gross for tax: same above amount.
Earnings for NI: 3532.00
Payment period: monthly
Employers pension: 267.4
And thats it. The box next to it that has YTD figures has the same (obviously cumaltive to date) and includes:
Tax paid TD
National insurance TD
Employers pension TD
Employees pension TD.

The top part of the wage slip shows payments on the left which totals the 5635.5 and the right shows deductions: PAYE tax, national ins, employees pension and health care.

Finally a net pay figure at bottom.

I am allowed to pay as much as i want into the pension.

MDMD

andy.pandy wrote: »

Might sound like a silly question, but how can i tell?
Looking at my last wage slip on the left panel it shows my salary and uplift -forgot about that, so i actually get 51,120 p.a gross. On the right are deductions: paye, ni, employees pension & health deductions (forgot about that too).
How can i tell, there are some cumalive figures at the bottom for this period and ytd.

Only way to be absolutely certain is to speak to your payroll department. They should be able to confirm.