WYPF Additional Pension Contributions question

Tarama

Hi


I received some excellent information here last year and am checking in for a further query to help my daughter with further pension planning.






She works for WYPF and will be in a position to make a one off payment to purchase additional pension contributions (APCs) next year. Her salary is £28,000 and she wishes to buy £20,000 APCs. Do the scheme rules allow this - and if so is tax relief given on the £20,000 and if so how is it claimed? I know the current amount of APCs which can be purchased are approx. £6800


many thanks in anticipation


Tarama

Dazed_and_confused

Do you mean she is paying £20,000 to obtain additional pension of £x?

Contributions like this tend to be paid gross to the pension scheme instead of being deducted from salary.

If this is her only income and she has the standard tax code of 1185L/S1185L with no other complications then the contribution would reduce her taxable income to below her personal allowance and she would be entitled to all tax due for 2018:19 to be refunded.

This effectively means she wouldn't get any tax relief on a small part of the contribution (£28,000 only being £16,150 above this year's Personal Allowance).

Tarama

Hi Dazed


thanks for the prompt reply - yes what she wants to do is pay into the available APCs to buy additional pension. The sum she was thinking of was £20,000 from some money she has inherited. Thus from what you say here it may be better to do this over 2 years to gain the maximum tax advantages.


So buy £16,000 APCs in year 1 and then £4,000 in year 2? Is that correct?


It is not a matter of paying the £20,000 to purchase the APCs and then claiming tax relief on this?


Hope I have made myself clear here?


many thanks Tarama