Maximum Salary Sacrifice

Paul_Herring

Max. that can be sacrificed straight into pension by employer = £50000 - £17076.80 = £32923.20

Don't forget to add the employer contribution onto that.

- (a) if no annual carry-over allowance remaining, = £40000 - £32923.20 = £7076.80, or:
- (b) if plenty of carry-over allowance remaining, = £17076.80

(a) will be the remainder of £40,000 minus your sacrifice and your employer contributions. Multiplied by 80%.
(b), mutatis mutandis, likewise.

Is this allowed?

Yes. Consider it an extension of what people with no income can contribute - £2,880, which gets 25% relief to bump it up to £3,600.

Sheriff_Fatmen

Dazed_and_confused wrote: »

So for someone earning £17076 they will still need to pay c£915 in income tax.

Yes, but in the case that I presented, the pension regs would let me make a personal payment of maximum £17076 back into my pension? and the pension administrator would top that up by another £4269 (25%)?

or from Paul_Herrings post above

.......would let me make a personal payment of maximum £13660.80 back into my pension? and the pension administrator would top that up by another £3415.20 (25%)?

Paul_Herring

the pension regs would let me make a personal payment of maximum £17076 back into my pension? and the pension administrator would top that up by another £4269 (25%)?

No, as I indicated in my post, (using your slightly wrong numbers*), you could make a maximum personal payment (carry-forward permitting) from net pay of £17,076*80% = £13,660.

Which would be bumped up by 25% of £13,660 to bring it back up to £17,076.

The total amount, including any tax relief is what needs to match up to the numbers you're aiming for (i.e. the maximum amounts of £40,000 (+carry-forward) and gross pay.)


* You're still failing to take account of any employer contribution above your own salary sacrifice.

Dazed_and_confused

You asked what the personal income tax liability would be. For most people, including those making relief at source pension contributions, that will be £915.

I had assumed that the £17,076 was the maximum (gross) contribution so the pension tax relief will only be £3,415. Added to a net contribution of £13,661.

If the tax relief was £4,269 then the gross contribution would be £21,345. And the personal income tax liability would still be £915.

Sheriff_Fatmen

Paul_Herring wrote: »

No, as I indicated in my post, (using your slightly wrong numbers*), you could make a maximum personal payment (carry-forward permitting) from net pay of £17,076*80% = £13,660.

Which would be bumped up by 25% of £13,660 to bring it back up to £17,076.

The total amount, including any tax relief is what needs to match up to the numbers you're aiming for (i.e. the maximum amounts of £40,000 (+carry-forward) and gross pay.)


* You're still failing to take account of any employer contribution above your own salary sacrifice.

thanks Paul, with you now.

noted re: employers contributions but I was just trying to keep it as simple as I could; its a useful point for others though, thanks