Higher Rate Tax Relief

NoMore

You don't have to wait until the end of the tax year. I just ring up the tax office, give them my expected income for the year, and my gross contributions to my sipp for the coming tax year and they adjust my tax code for that year.

No need for tax return or waiting.

cloud_dog

VDOT47 wrote: »

To revive this thread for one further question - I now have the ability to pay an extra £500 pcm into a pension.

If I increase my contribution to the workplace pension it will work as discussed above. If I set up a separate private pension, presumably I make separate payment of £500 each month from my net salary received (so, already taxed) and wait until the end of the tax year to do a return and get all the available tax relief as a rebate? How long does it normally take to receive the rebate once the tax return has been submitted?

Thanks!

VDOT, can you clarify if salary sacrifice is on offer? If it is, why wouldn't you make use of this?

40% tax threshold/ save 2% NI
20% tax threshold/ save 12% NI

If you have a preference for not all of your pension to be in your workplace pension then enquire if the workplace pension supports partial transfers periodically (in to another pension/SIPP).

I fully utilise my pension contributions using salary sacrifice because of the additional NI savings, and it enables me to get below the £50k limit for CB and married couple allowance transfer.

VDOT47

Cloud Dog - interesting, I will have to find out if my employer does salary sacrifice. I also need to establish if the workplace scheme is better or worse than I could get separately! Am seeing an IFA next week to get advice on this.

BoxerfanUK

VDOT47 wrote: »

Cloud Dog - interesting, I will have to find out if my employer does salary sacrifice. I also need to establish if the workplace scheme is better or worse than I could get separately! Am seeing an IFA next week to get advice on this.

If your employer doesn't do salary sacrifice you could always ask them to consider setting one up.

That's what I did a few years ago with my DW's employer. They didn't do SS so I suggested to my DW that she ask them and lo and behold they introduced a SS scheme. They also pass on 10% of their 13.8% employer NI saving into her pension as well :j Her employer still benefits as they still save 3.8%

There's no harm in asking.

VDOT47

My first payslip from my new employer shows figures for auto-enrolment pension deductions at a level which appear to already have the 40%tax relief deducted at source, so it seems this has been salary sacrificed.

My only decision now is whether to salary sacrifice the additional pension payments to gain the NI saving too. Need to weigh it up against any impact that the salary sacrifice (and therefore technical reduction in my gross headline salary) might have on the amount that we may be able to borrow when we make a mortgage application in 2021 when we want to move house.