Self-assessment confusion re: personal pension

Dazed_and_confused

Well if you saw the Scottish budget changes you may find there's plenty of work if you ever want to come out of retirement

dunroving

Dazed_and_confused wrote: »

Whilst clearly keen to understand you are somewhat overcomplicating things and whilst you stuck to simplicity in completing the return that appears to have gone out of the window now!

You cannot claim a deduction/allowance for payments to a SIPP.

They simply increase the amount of 20% tax you can pay, they don't reduce your actual income which needs to be taxed.

Taxable pension income £47363
Less Personal Allowance £11000
Income on which tax needs to be paid £36363

Basic rate tax on £36363* = £7272.60
Less PAYE tax paid £4079
Amount still payable £3193.60
*more than £32000 due to the SIPP

That seems very close to the figure in your original post.

Had you not contributed to the SIPP at all the calculation would have been

Taxable pension income £47363
Less Personal Allowance £11000
Income on which tax needs to be paid £36363

Basic rate tax on £32000 = £6400.00
Higher rate tax on £4363 = £1745.20
Total tax payable = £8145.20
Less PAYE tax paid £4079
Amount still payable £4066

So in addition to the basic rate tax relief the pension company added to your SIPP payment (£1900?) you have also saved yourself another £872.40 in a lower self assessment bill.

Yep, that's pretty much what the HMRC calculations page said. If I'd known that page existed, I could have saved everyone a lot of grief.

Thanks for your help (and everyone else).