AVC instead of paying higher rate?

DonPatch

Hi

If In subtract all my salary sacrifice and add my taxable benefits then my salary is just over £40,000.

I should be getting a bonus and I originally thought this might be 15% (£6,000), but I've recently learnt that it may be 20% (£8000) which would make me a higher rate tax payer. Would it be worth me paying the additional into an AVC as I would be paying 42% anyway and I believe I would get to keep the whole amount by paying it into a pension? Or not worth doing anything as its not big bucks obviously!

Thank you for any help.

Dazed_and_confused

Is your bonus really based on the total of your post salary sacrifice pay (sounds logical although to your detriment) plus benefits in kind (not as logical, you choose an expensive car say and get a bigger bonus)?

But to answer your question, it's personal choice really.

If you don't need all of the bonus then you could put some into a pension to reduce your 40%/41% liability.

The consensus on here is likely to be to go with a small pension contribution if you will definitely be getting higher rate tax relief on the contribution

dunstonh

Would it be worth me paying the additional into an AVC as I would be paying 42% anyway and I believe I would get to keep the whole amount by paying it into a pension?

Paying into a pension may well be a viable option (ignoring whether it should be an AVC, PPP, SHP or SIPP for the time being)

It really depends on your objectives.