Lump sum payments or increased monthly contributions from salary into pension?

Sheila_M

I currently pay £1500 per month into my company pension. I am a 40% tax payer.
I have £50,000 lump sum and I would like advice on whether to pay it to my pension in one lump or double my monthly salary contribution to £3,000.
My main query is...would a lump sum still attract 40% tax relief?
Thanks very much

Dazed_and_confused

I have £50,000 lump sum and I would like advice on whether to pay it to my pension in one lump

Would the £40k contribution limit be an issue?

My main query is...would a lump sum still attract 40% tax relief?

Impossible for anyone to say. You may be due £0.20 higher rate relief. You may be due nearly £21k higher rate tax relief.

But without knowing where you are resident for tax purposes and what your income is it's a bit tricky to say.

Paul_Herring

My main query is...would a lump sum still attract 40% tax relief?

Ignoring any limits you may bump up against which would prevent you contributing in the first place, it all depends if it's covered by wages that were taxed at 40% to begin with.

Basically, you can't get more 40% rebate on contributions than you paid in the same tax year you contribute them.

cloud_dog

Sheila_M wrote: »

I currently pay £1500 per month into my company pension. I am a 40% tax payer.
I have £50,000 lump sum and I would like advice on whether to pay it to my pension in one lump or double my monthly salary contribution to £3,000.
My main query is...would a lump sum still attract 40% tax relief?
Thanks very much

As others have said...a lot depends on your salary as to how much and what percentage at 40% and what at 20%.

Does your company pay via Salary Sacrifice? If so then at 20% taxation you will save an additional 12% NI contributions (32% in total)

xylophone

Annual Allowance considerations?

Is there any possibility that you could use carry forward?

https://www.hl.co.uk/pensions/contributions/carry-forward-rule


Pension carry forward rules
If you want to carry forward your pension allowance, there are two requirements you need to meet:

You had a pension in each tax year you wish to carry forward from, regardless of whether or not you actually made a contribution (the State Pension doesn’t count).

You have earnings in the current tax year of at least the total amount you are contributing. Although this does not apply to contributions your employer makes.