SIPPs and tax relief

Dazed_and_C0nfused

Are you contributing £64k or £80k?

I think you missing the concept of Self Assessment.

You should keep the evidence in case HMRC ever investigate your return and ask for it.

You should also keep a record of how you have calculated the ability to contribute more than £40k.

robwithsipp

Contributing 80k like i said. 

Dazed_and_C0nfused

The pension company will add £20k giving you a fund of £100k.

You include that on your Self Assessment tax return and your basic rate tax band is increased by £100k.

The tax savings will depend on your total taxable income and what type of income it is.  Some may be being taxed at 0% to start with.

Albermarle

Also do not think that there is no exchange of info between HMRC and the pension providers . If they want to investigate they can. Although as already advised best to keep details yourself, just in case.

jamesd

You can use their online service to tell HMRC about expected contributions and they will adjust your tax code during the year to give you a extra relief. Too late to be really useful this year but a tax return filed n 6 April would be good. You can estimate some numbers and adjust later.

With 110k income and 110k personal pensions the calculation will be:

1. Basic rate band increased from 37,500 to 147,500.
2a. 12,500 taxed at 0% (you got 25% added in the pension for this anyway)
2b. 97,500 taxed at 20%
2c. potential additional 12,500 taxed at basic rate but no income to use this
3. all higher rate tax will be refunded

If you won't have the income to contribute all of your higher rate income next year I suggest keeping some money back for that.

DT2001

Jamesd makes a lot of sense to me. With what is known assuming the £40k annual limit and carry forward remain unchanged it is best for the OP to put in £50k this year? He has earnt £110k and put in £10k so another £50k will bring taxed income to BR. It will utilise the whole of the oldest year of carry forward and £10k of next. Next tax year put in an extra £20k (total £70k) assuming earnings at £110k and £40k in and allowances unchanged. The final £10k could go in in 2 years time.
the withdrawal of higher rate relief makes no difference as only utilising to the full each year. The fly in the ointment would be a change to annual £40k allowance or carry forward.
Is my understanding correct?

OP can you salary/bonus sacrifice to save NI for you and employer. I did for a one off bonus a few years ago utilising carry forward so hopefully still an option.