Tax relief on contributions

DoDa

Hi, I understand you can pay 100% of salary (£19,300) into a pension, but do you get tax relief on the whole amount or just on the amount tax is due? i.e. £19,300 - £11,500 personal allowance.
Thanks

jennyjj

DoDa wrote: »

Hi, I understand you can pay 100% of salary (£19,300) into a pension, but do you get tax relief on the whole amount or just on the amount tax is due? i.e. £19,300 - £11,500 personal allowance.
Thanks

The whole amount.
Indeed, if you have no salary and pey 2880 into a pension, HMRC adds 720
If doing it from salary as avcs, dont forget to set aside about 15% to cover NI contributions.

Maybe this will help, as there are different ways tax relief can be applied, depending on pension type

https://www.standardlife.co.uk/c1/guides-and-calculators/managing-your-pension-tax-relief.page

http://lib.standardlife.com/library/uk/gen658.pdf

Don't 'waste' your personal allowance.

Paul_Herring

You get relief on the whole amount.

HappyHarry

To be clear, if your salary is £19,300 then you could contribute £15,440 to a pension, to which £3,860 tax relief would be added, bringing the total contribution up to £19,300.

Dazed_and_confused

If you are paying into a personal pension or sipp you will get tax relief on it all i.e. you actually pay £15,440 and the basic rate tax relief added makes it up to £19,300.

But you still have to pay tax as normal on the £19,300 salary (which would be about £1500 in the current tax year), the pension contribution doesn't change this at all.

Noodling

Don't forget to account for any contributions you may already make to a company pension. You need to deduct the gross annual amount if it's DC, or roughly 16 x the annual increase if it's DB.

Of course if you are thinking of paying all your salary into your company pension, then I'm sure the administrators will guide you.

Dorian1958

If you are intending converting all of your salary into pension contributions, in addition to making sure you have set aside enough for your company's pension contribution, and your NI payment (as already stated) you may want to check that there are no other routine automatic deductions, for e.g. charity donations, union subs, cycle to work scheme etc.

george278

On the same theme are pension payments from a SIPP counted as earnings? I will have drawn out £11500 from my SIPP, that is in draw down, this tax year and I have other earnings from a part time job of £440. Can I contribute more than £2880 net, £3600 gross to my SIPP this current tax year?

Dazed_and_confused

No.

They are taxable income but not earnings for pension contribution purposes.

So you are limited by the £2880/3600 rule and will have tax to pay on the earnings (if not already deducted or there is some other relevant information we don't know about).

george278

Thanks for the info Dazed, it looks like I've overpaid into my SIPP the princely sum of £312 this tax year.

I assume that I need to declare this to HMRC. Anyone recommend the best format to do this and any timescales?

kidmugsy

george278 wrote: »

I have other earnings from a part time job of £440. ?

£440 per what? £440 for the whole tax year?