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Calculating pension payments vs annual allowance
mramra
Posts: 619 Forumite
Hi everyone. I'm trying to get my head around how much I can contribute to my SIPP this tax year.
Ignoring carry forward....if my gross salary is £90k and I have 20% taken at source (combined personal and employer payments) then it's £18k into pension.
My question is does this then leave £22k of the £40k annual allowance, so I could contribute up to £22k x 0.8 = £17,600 further into my SIPP before tax relief?
A little confused as the £18k is reducing tax paid at 40% whereas the SIPP contribution is calculated at 20% for the purposes of annual allowance I believe.
Ignoring carry forward....if my gross salary is £90k and I have 20% taken at source (combined personal and employer payments) then it's £18k into pension.
My question is does this then leave £22k of the £40k annual allowance, so I could contribute up to £22k x 0.8 = £17,600 further into my SIPP before tax relief?
A little confused as the £18k is reducing tax paid at 40% whereas the SIPP contribution is calculated at 20% for the purposes of annual allowance I believe.
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Comments
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I don’t know the answer, but if your 20% is salary sacrifice then it includes employees NI and possibly employers NI as well (this can be passed on usually at 0%, 50% or 100%).0
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20% of £90k is £18k not £14K!This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0
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I’m sure I saw £70k earlier.
Edited?0 -
Apologies....updated now.....£90k so £18k combination of personal and employer contributions combined taken from gross pay, not salary sacrifice0
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