Max £40k annual pension payment

spock007

Hopefully this is a simple one....

You're allowed to pay £40k per annum into your pension.
Does this include the employers contribution if on a private scheme (I assume so!).

Crucially, does it include the government's top-up (e.g. 40% relief if higher rate)?
Thanks!

hugheskevi

You're allowed to pay £40k per annum into your pension.

£40,000 is the standard Annual Allowance. This can be lower due to the tapered Annual Allowance if your Threshold Income exceeds £110,000 and your Adjusted Income exceeds £150,000. See this page if you want more information about this.

You can carry-forward any unused Annual Allowance from the last 3 years to use in addition to your 2019/20 Annual Allowance. See this page if you want more information about this.

Does this include the employers contribution if on a private scheme (I assume so!).

Assuming a Defined Contribution scheme, yes. If Defined Benefit it is more complicated.

Crucially, does it include the government's top-up (e.g. 40% relief if higher rate)?

Assuming a Defined Contribution scheme, yes. If Defined Benefit it is more complicated.

spock007

Thank you! So it's the total of my contribution, my employer's and government top-up.
Appreciated

Dazed_and_confused

Crucially, does it include the government's top-up (e.g. 40% relief if higher rate)?

No. The government (HMRC) only add basic rate tax relief to your pension, and that is only for a "relief at source" scheme.

There is no equivalent relief with "net pay" contributions.

Any higher rate tax relief which you might be entitled to with a relief at source contribution comes back to you as a refund or reduced tax owed to HMRC, it does not get added to your pension fund.

LHW99

I asked something similar here
https://forums.moneysavingexpert.com/discussion/5987469/combination-of-person-company-contributions


I think the £40k will include the government's contribution on your personal payment(s), but nothing on the employer's if paid by them direct as said above

Sibbers123

Don't forget, you will only get tax relief on the maximum of your net relevant earnings which may be lower than £40k.

zagfles

LHW99 wrote: »

I asked something similar here
https://forums.moneysavingexpert.com/discussion/5987469/combination-of-person-company-contributions


I think the £40k will include the government's contribution on your personal payment(s), but nothing on the employer's if paid by them direct as said above

No you have totally misunderstood. Your thread was about the earned income/tax relief limit (£3600/revelant earnings).

The annual allowance (ie "the £40k") is a completely separate limit, and does include employer contributions to a DC scheme as others have said above. In the case of a DB scheme it's not contributions (employee or employer) that count but the increase in pension value.

LHW99

No you have totally misunderstood. Your thread was about the earned income/tax relief limit (£3600/revelant earnings).

I agree my post was mainly re form filling, but see my question c) re the combination of personal / company contributions and answer to this in post #2.

zagfles

LHW99 wrote: »

I agree my post was mainly re form filling, but see my question c) re the combination of personal / company contributions and answer to this in post #2.

I don't know what II are asking you to declare. Fact is, employer contributions to a DC scheme do count towards the annual allowance. They don't count torwards the "tax relief/relevant earnings" limit, because you don't get (direct) tax relief on them.