annual limit and tax relief

mpension

Hi,
I wonder if I can get some advice please?

I have searched on google for an answer, but all seem to say the same thing without actually aswering my question.

Regarding the annual limit (40,000). if a person earns 80,000 and wants to put in the max, is that 40k from their wages, or is it 40k including tax relief?

Not sure if that makes sense, but wondering if its 26k(ish) and made up to 40k with the tax relief or 40k then tax relief added?

also, is there a calculator to tell me ho much relief i will get on an amount (e.g 28k), that will calculate the 20% and 40% parts - so what will go in in total?

Many thanks for any help. If there's a site that will explain this - I'd be happy to go to it and read.
Regards

Paul_Herring

It's the total that ends up in your pension fund; I. E. Your contributions, any 20% tax relief if you're not using salary sacrifice, and employer contributions.

The remaining relief on the 40% doesn't count to the limit since it's claimed outside the pension.

xylophone

John Smith earns £80,000 a year.

He opens a personal pension.

He transfers the sum of £32,000 to the pension.

The provider claims tax relief of £8000 and adds it to the pension.

Because John is a higher rate tax payer, he contacts HMRC about additional relief.

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

xylophone

See also

https://www.which.co.uk/money/pensions-and-retirement/pensions-retirement-calculators/pension-tax-relief-calculator-angp51p666u6

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

https://www.which.co.uk/money/pensions-and-retirement/personal-pensions/contributing-to-a-private-pension-explained/how-the-pensions-annual-allowance-works-ac8d33u9v9ch

mpension

Many thanks for your help. much appreciated.

I saw that quote from HMRC, however, i pay through salary sacrifice. does that mean the 40% is taken care of already?
that's what I've been told. i don't claim it back as I haven't paid the 40% in the first place - the salary has been 'sacrificed'

if that is the case, how can i work out how much i can put in without going over 40k total? im not entirely sure how much will get 20% and how much will get 40%

many thanks again for your help - it really is appreciated

mpension

oops, just seen the links from xylophone. thank you.

Albermarle

i don't claim it back as I haven't paid the 40% in the first place - the salary has been 'sacrificed'

Correct, the money goes into your pension before it is taxed .

im not entirely sure how much will get 20% and how much will get 40%

As it I salary sacrifice this has no part in calculating the annual allowance .
All you need to do is add what you are sacrificing to what your employer contributes and make sure in a tax year the total is less than £40K

Paul_Herring

if that is the case, how can i work out how much i can put in without going over 40k total?

£40k minus your employer contributions is the amount you may salary sacrifice.

As you said, SS doesn't get taxed, so there are no rebates to be had to claim back tax that wasn't taken.

The upside to SS being you don't get NI taken off those contributions either so you 'win' that way.

BoxerfanUK

Don’t forget the 40k limit also includes any employer pension contribution

dunstonh

And dont forget that you may be eligible for carry forward and able to pay in more than £40k.

Dazed_and_confused

And as it is salary sacrifice you aren't actually contributing to a pension. Your employer is.