Quick question re calculating max contribution

kipperman

Hello nice people

I have (honest!) tried to find a definitive answer about this.

If for example I had a salary of £ 30000 p/a

My employment scheme contributes ( including employer contribution) £10000.

Leaving me able to contribute £20000 to a SIPP (using the "up to salary limit" . The question is though, is that £20000 the net or gross figure? - i.e can I pay the SIPP £20000, or only £16000 ( as the SIPP will have received a total of £20000 once the HMRC relief is considered)

Most grateful

HappyHarry

Neither.

You can receive tax relief on your gross contributions up to a limit of your salary, so a total of £30,000. This includes your net contributions plus tax relief. It does not include your employers contributions.

The overall contribution, including your employers contribution can not exceed your annual allowance of £40,000.

Example
Let's say that in your scheme, you contribute £4,000, get tax relief of £1,000 and your employer contributes £3,000.

Your gross contribution so far is £5,000. (Your £4,000 plus the £1,000 tax relief). This means you can contribute a further £25,000 gross (£20,000 net) to stay within your salary limit of £30,000.

The total contribution, including employers contribution, would then be £33,000, still within your annual allowance of £40,000.

kipperman

Thanks very much for this!