Salary contributions vs One off payments

BenjiCat_2

Sorry if this is an obvious question but after quite a bit of Googling I cannot find a definitive answer.

Are there any tax or other differences between paying into a pension via your salary or one-off/regular payments?

I understand the pension company will collect any tax relief on any contributions so this is the same but what about NI?

- Basic rate taxpayer
- Automatic enrolment pension
- Employer making minimum contributions and I am exceeding my minimum contributions

TIA

Brynsam

If you make contributions by salary sacrifice there's a potential NI saving, but from your post it doesn't sound as if that is the case? If not, worth asking your employer to consider it.

Otherwise no difference in terms of NI whether you pay lump sums or have regular contributions via salary.

kidmugsy

Our habit is that near the start of every tax year we bung £2,880 each into a pension. I wonder whether we'd be wiser to add the money later in the year having first made some interest on it. 5% AER on a regular saver at Nationwide, or a FlexDirect current account, for instance: that's almost 3% above CPI inflation - pretty good for an effectively risk-free investment.

No definite answer is possible but the later contribution would have the advantage for anyone under 55 of preserving some flexibility for nearly a year.

If I were under 40, a basic rate taxpayer, faced with unmatched extra pension contributions, and a lack of salary sacrifice, I might well consider a LISA instead for that extra saving. If I could bear to wait to sixty before withdrawing money.