Additional pension contributions to avoid losing personal allowance

ratechaser

Dazed_and_C0nfused said:

What is her current tax code?

After she files her 2019:20 return HMRC will probably change her 2020:21 tax code to include tax relief on pension contributions.  This is not tax relief for the £25k contributed in 2019:20 it is an assumption she make a similar payment in 2020:21 so if that won't be the case she should get it removed from her 2020:21 tax code quickly otherwise she will end up with a large tax bill for 2020:21.

Would need to check but know she's very deep into K territory as a result of HMRC already having made that assumption for 2019/20, plus collection of additional tax liabilities on savings from 2018/19 - pretty much all our cash savings are in her name so that at least it's only taxed at 40 and not 45%.

This isn't the first year she's been at around 120-125k taxable earnings, but it's the first year we have taken action to bring that down to 100k through pension contributions...

Dazed_and_C0nfused

HMRC don't usually collect tax owed on savings interest for 2018:19 through the 2019:20 tax code.

Much more likely it is an estimated amount to collect tax for this tax year (2019:20).

Anything owed for 2018:19 would be collected as part of the Self Assessment calculation.  And occasionally this (the Self Assessment balancing payment) then gets included in the 2020:21 tax code but never 2019:20.

ratechaser

Dazed_and_C0nfused said:

HMRC don't usually collect tax owed on savings interest for 2018:19 through the 2019:20 tax code.

Much more likely it is an estimated amount to collect tax for this tax year (2019:20).

Anything owed for 2018:19 would be collected as part of the Self Assessment calculation.  And occasionally this (the Self Assessment balancing payment) then gets included in the 2020:21 tax code but never 2019:20.

Yes that makes sense and I'm sure it's what has happened, as I said she's been in this situation for a while now, so there's no doubt a presumed 'on account' coding adjustment made each year to soften the following years impact.