How to calculate tax relief when buying additional pension in a defined-benefit scheme?

Apodemus

Also remember that for some DB schemes, such as LGPS, lump sums do not attract automatic “relief at source”, you pay the whole sum into the pension and claim the basic (or higher rate) tax back from HMRC yourself. This means that there can be benefits to timing the payment for March, although you may then have to hound the accounts folk for your P60 so that you can get your self-assessment in as early as possible after the end of the tax year.

hugheskevi

Also remember that for some DB schemes, such as LGPS, lump sums do not attract automatic “relief at source”, you pay the whole sum into the pension and claim the basic (or higher rate) tax back from HMRC yourself. This means that there can be benefits to timing the payment for March, although you may then have to hound the accounts folk for your P60 so that you can get your self-assessment in as early as possible after the end of the tax year.

You can amend your tax code in advance of making the contribution to get the relief due. This can be done anytime, eg, you could amend your tax code in May but not make the contribution until March.

Dazed_and_confused

Also remember that for some DB schemes, such as LGPS, lump sums do not attract automatic “relief at source”, you pay the whole sum into the pension and claim the basic (or higher rate) tax back from HMRC yourself

Which from previous threads on here HMRC struggle a little to understand, presumably as it's relatively uncommon in the world of pension contributions compared to relief at source and net pay.

And whilst there are obvious advantages to that type of contribution (to a DB scheme) the tax relief would be limited compared to a relief at source payment as you are only able to get the amount of tax you actually pay reduced when you make a gross lump with no tax relief at source contribution. On £50k income you cannot contribute £40,000 and get £10,000 tax relief.

In that situation the maximum tax relief for a gross lump sum contribution would be £7,500. But you would only to make a payment of £37,500 to get that.

NB. It would be different if Scottish resident for tax purposes.