A few tax relief questions

zagfles

Can you download the payslip - sometimes it shows differently on a downloaded payslip than looking at it online. You need the YTD figure for taxable pay.

sparky0138

Can you download the payslip - sometimes it shows differently on a downloaded payslip than looking at it online. You need the YTD figure for taxable pay. 

This is the only other view online:

The employer's contributions when multiplied by 12 comes to £1938. If you add up the figures on the other sheet, it comes to £2078.72

My mum and I actually work at the same place. We both work the same hours. My figures add up perfectly for the pension contributions (what I actually paid in versus what they have me down as paying in) although the salary in the year to date is wrong, same as hers. The only difference in our wage slips seems to come down to her having a bit of time on sick, whereas I haven't had any. She was paid in full though so there's no actual difference in salary or contributions so I just don't know.

sparky0138

I've been doing some more working out and I think I've solved the problem of why the YTD figure is wrong. I was told a while ago that someone had wrongly deleted the sickness records prior to September so if you add up the actual monthly payments starting in September, the YTD figures do add up.

The two times my mum was on sick since then has obviously messed up the pension contribution section although I don't know why as she was paid in full.

So this is how she's going to work it out. I think it's best she use the inflated LGPS figures just to be on the safe side.

[gross earnings] - [gross SIPP contributions] - [net LGPS contributions] - [gross LGPS employer contributions] = [gross amount she can still contribute]

I've put net LGPS contributions because as it's a net pay arrangement and she doesn't pay tax, I believe this is correct.

I've put gross LGPS employer contributions because I don't know if they add the tax relief.

Please, if anyone spots any obvious mistakes, let me know.

Thanks again for all your replies.

zagfles

Why are you taking off employer contributions? Otherwise looks right. Read the link I quoted earlier to the Pru website.

sparky0138

zagfles said:

Why are you taking off employer contributions? Otherwise looks right. Read the link I quoted earlier to the Pru website.

But the link I posted earlier in the thread contradicts that: https://thepeoplespension.co.uk/help/knowledgebase/whats-the-maximum-amount-i-can-pay-into-my-pension-pot

And also the link that xylophone posted: https://www.which.co.uk/money/pensions-and-retirement/personal-pensions/contributing-to-a-private-pension-explained/how-the-pensions-annual-allowance-works-ac8d33u9v9ch?wgu=5665_54264_158591075476_4d6911efe5&wgexpiry=1593686754&utm_source=webgains&utm_medium=affiliates&utm_content=22278&source_code=314AGJ

zagfles

sparky0138 said:

zagfles said:

Why are you taking off employer contributions? Otherwise looks right. Read the link I quoted earlier to the Pru website.

But the link I posted earlier in the thread contradicts that: https://thepeoplespension.co.uk/help/knowledgebase/whats-the-maximum-amount-i-can-pay-into-my-pension-pot

And also the link that xylophone posted: https://www.which.co.uk/money/pensions-and-retirement/personal-pensions/contributing-to-a-private-pension-explained/how-the-pensions-annual-allowance-works-ac8d33u9v9ch?wgu=5665_54264_158591075476_4d6911efe5&wgexpiry=1593686754&utm_source=webgains&utm_medium=affiliates&utm_content=22278&source_code=314AGJ

AAAARRRRGGGHHHH!

The annual allowance is NOT RELEVANT to somone earning £10k. Totally ignore it. Forget it. Don't look at any rules to do with the annual allowance. It's not relevant. OK? (should add - unless the MPAA applies - ie she's taken certain pension benefit already - google "mpaa triggers"). Otherwise the annual allowance is £40k. She's nowhere near it. Forget it.

Now read the Pru link. And read the first paragraph of the people's pension link. NOT the rest of it which is about the annual allowance. Which as I say is not relevant.

Paul_Herring

sparky0138 said:

But the link I posted earlier in the thread contradicts that: https://thepeoplespension.co.uk/help/knowledgebase/whats-the-maximum-amount-i-can-pay-into-my-pension-pot

It doesn't contradict it - you're possibly conflating a couple of things, thinking they're the same but they're not.

There are two limits:

1) How much can be contributed and receive tax relief (typically her contributions) - restricted to her gross wage.

2) How much can be contributed in total - restricted to £40,000 (absent tapers, MPAA and carry-forward, and is typically the sum of both her and her employer's contributions, or in the case of a DB scheme, the increase in pension value.)

Your link states:

You can pay as much as you like into your pot, but there are limits to how much tax relief you can receive. If you’re under 75, you’re eligible to pay in up to 100% of your UK taxable earnings or £3,600 gross (whichever is higher) and receive tax relief on your contributions.

That's #1. The most she, herself, can contribute, and get tax relief on is limited to her wages. The tax relief itself is included in this total.

The limit includes the contributions paid into all of your pensions (if you have more than one), includes your personal contributions, tax relief and any contributions that are paid by your employer.

That's talking about #2. The most that can go into the pension, including employer contributions which don't attract tax relief, is limited to £40,000.

Your calculation is trying to figure out what's left for #1, but subtracting things that only contribute against #2 (specifically the employer contributions.)

zagfles

Paul_Herring said:

sparky0138 said:

But the link I posted earlier in the thread contradicts that: https://thepeoplespension.co.uk/help/knowledgebase/whats-the-maximum-amount-i-can-pay-into-my-pension-pot

It doesn't contradict it - you're possibly conflating a couple of things, thinking they're the same but they're not.

There are two limits:

1) How much can be contributed and receive tax relief (typically her contributions) - restricted to her gross wage.

2) How much can be contributed in total - restricted to £40,000 (absent tapers, MPAA and carry-forward, and is typically the sum of both her and her employer's contributions, or in the case of a DB scheme, the increase in pension value.)

Your link states:

You can pay as much as you like into your pot, but there are limits to how much tax relief you can receive. If you’re under 75, you’re eligible to pay in up to 100% of your UK taxable earnings or £3,600 gross (whichever is higher) and receive tax relief on your contributions.

That's #1. The most she, herself, can contribute, and get tax relief on is limited to her wages.

The limit includes the contributions paid into all of your pensions (if you have more than one), includes your personal contributions, tax relief and any contributions that are paid by your employer.

That's talking about #2. The most that can go into the pension, including employer contributions which don't attract tax relief, is limited to £40,000.

Your calculation is trying to figure out what's left for #1, but subtracting things that only contribute against #2 (specifically the employer contributions.)

Thank you! I've been tearing my hair out trying to explain this in several threads but the above is as good an explaination I've seen - I think it'll be my new reference! Made a slight tweak above in bold, which is applicable to schemes like LGPS.

Paul_Herring

zagfles said:

Thank you! I've been tearing my hair out trying to explain this in several threads but the above is as good an explaination I've seen -

Yay! I think I finally understand it enough now

Made a slight tweak above in bold, which is applicable to schemes like LGPS. 

I've modified my post to reflect it.

sparky0138

It doesn't contradict it - you're possibly conflating a couple of things, thinking they're the same but they're not.

THANK YOU!!!!! That's exactly what I was doing. It's taken a while but I've finally got it and your explanation was perfect.

zagfles, sorry for contributing to any hair loss.