Silly question on pension allowance

zagfles

AnotherJoe wrote: »

Very useful, thanks to all, I didn't realise the £40k was your contributions only and employers was not taken into account at all. So if for sake of argument, additions to my company DC pension fund last year was £20k, but my employer contributed 50% of that, then I've got another £30k gross I can add in.

What do you mean "the £40k"? If you mean the annual allowance, then employer contributions certainly are included!!

But they're not included for the "100% of earnings" limit on tax relief.

bigadaj

AnotherJoe wrote: »

Very useful, thanks to all, I didn't realise the £40k was your contributions only and employers was not taken into account at all.
So if for sake of example, additions to my company DC pension fund last year was £30k, but my employer contributed £15k of that, then I've got another £25k gross I can add in rather than the £10k I thought.

No, inclusive of employers as stated by zagfles,

£40k is the maximum if you earn more than that, unless you have carry forward from previous years in which case it's your total earnings for the year, until you've used up the spare allowance from previous years.

zagfles

bigadaj wrote: »

No, inclusive of employers as stated by zagfles,

£40k is the maximum if you earn more than that, unless you have carry forward from previous years in which case it's your total earnings for the year, until you've used up the spare allowance from previous years.

No - you're trying to combine the limits! As I said above, you can't, they work to different rules!

Someone earning £38k whose employer contributes 10% to their DC scheme will exceed the AA if they contribute all their taxable earning to their SIPP (of course they might have carry forwards available).

Similarly someone earning £30,000 who has a 1/43rd CARE scheme would exceed the AA if they contributed £30,000 gross to a SIPP.

So probably would someone on a lower salary in a final salary scheme who got a good payrise.

The AA and "100% of earnings" limits are separate limits with different rules and must be considered separately. Ignore any simplistic rubbish which attempts to combine them.

AnotherJoe

Dang i misread. Sorry.

samscash

Sorry to bring this back to the top but to work out my remaining allowance I presume I take off the gross payments in i.e the cash paid and the inflated by 25% ?

Or do I need to so one work out the 40% amount as well?

Thanks

zagfles

samscash wrote: »

Sorry to bring this back to the top but to work out my remaining allowance I presume I take off the gross payments in i.e the cash paid and the inflated by 25% ?

Or do I need to so one work out the 40% amount as well?

Thanks

For the SIPP contributions the gross amount that goes in. So if you put in £8000 and the SIPP claimed £2000 tax relief then £10,000.

If you get any higher rate relief it goes to you not the SIPP so you don't include it.