Pension contribution limit in a tax year

tigerspill

My OH has a DB occupational pension.  And she is considering to a SIPP.
I have gone through some of this in another thread, but have a specific question on the limit that she can add to the SIPP.
There is obviously the £40K annual allowance, but her salary is lower than this (just).
I believe that any contribution to the new SIPP - the salary limit will be reduced by contributions to her DB pension.
The question - will the salary limit be reduced by -
1.  Employee contributions as detailed on her pay slips.
2. The "Pension Input Amount" for the year
I believe that employer contributions are not relevant here.  And I think the answer is option 1 above, but am not sure.
Thanks

xylophone

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/pension-contributions-qa
See  above under
Q: My client is an active member of his employer’s defined benefit pension scheme. He also wants to make a personal pension contribution. How do I calculate the maximum personal contribution allowed for tax relief? He has a pensionable salary of £37,500 and pays 3% employee contribution.

tigerspill

xylophone said:

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/pension-contributions-qa
See  above under
Q: My client is an active member of his employer’s defined benefit pension scheme. He also wants to make a personal pension contribution. How do I calculate the maximum personal contribution allowed for tax relief? He has a pensionable salary of £37,500 and pays 3% employee contribution.

Perfect.  Thats exactly what I needed and this clearly solved the confusion I had between use of salary maximum and relation to annual allowance.
Thank you!!

zagfles

Common confusion, there's a lot of rubbish spouted about this, even by IFAs and usually reliable publications, but the above link is an excellent explaination from the Pru.

Note that in the example, if the client did have carry forwards available, which would normally be the case if he'd been in a pension scheme in previous years and not made big contributions, he'd be able to contribute £36,375 making use of AA carry forwards.

tigerspill

zagfles said:

Common confusion, there's a lot of rubbish spouted about this, even by IFAs and usually reliable publications, but the above link is an excellent explaination from the Pru.

Note that in the example, if the client did have carry forwards available, which would normally be the case if he'd been in a pension scheme in previous years and not made big contributions, he'd be able to contribute £36,375 making use of AA carry forwards.

Thanks.  This is what I took from this as well.  My OH has loads of AA carry over from previous three years.  So will be limited by the salary limits rather than the AA limits.

Bravepants

Yes, this seems sensible. Easy to get confused between Annual Allowance and Tax Free amount!