Self assessment and AVC

heronbommie

Personal allowance of £12500 reduces above £100k income, can AVC’s be used to maintain the personal allowance. 

e.g. if my taxable income is £110k and I put £10k in AVC?

Thanks

Dazed_and_C0nfused

The Personal Allowance isn't based on "income".

A lot of pension contributions don't actually reduce (taxable) income, they increase the basic rate tax band.

You need to read up on adjusted net income as that is what the Personal Allowance is based on.  The pension contributions will no doubt help (unless salary sacrifice which is a whole other story) but not in quite the way you originally thought.

heronbommie

Ok, read it on gov.uk. 

“Income” or personal net income is, let’s say £110k after all of the calculations. If I’m reading it correctly if I contribute £10k to AVC’s this will reduce the personal net income to the income-related reduction threshold.

heronbommie

and let’s say I have the annual allowance amount shortfall needed to do this.

Dazed_and_C0nfused

It depends on what type of contribution you are making.  The main two are,

Net pay (deducted on payslip before tax is calculated)

Relief at source (payment to pension company who add basic rate tax relief)
Or less frequently 
Gross contribution with no tax relief whatsoever at the point the payment is made

heronbommie

AVC will be net pay

Dazed_and_C0nfused

Then you cannot deduct them from your ANI calculation as they will already be taken into account by a lower P60 taxable pay figure.

Deducting them would be double counting.