Taper relief on Pension

redmalc

Hi All, last tax year I had a salary of 122K so exceeded the 110 k limit and i salary sacrificed 35k into my pension ,my company also paid £6500 into my pension and I paid £6000 can someone advise if my adjusted income will now be £169,500 and I will therefore only be able to put 30k into my pension.
Is there any other income which is classed as adjusted income.

HappyHarry

redmalc said:

Hi All, last tax year I had a salary of 122K so exceeded the 110 k limit and i salary sacrificed 35k into my pension ,my company also paid £6500 into my pension and I paid £6000 can someone advise if my adjusted income will now be £169,500 and I will therefore only be able to put 30k into my pension.
Is there any other income which is classed as adjusted income.

Was your salary of £122k before or after salary sacrifice? 

If before, then your salary was £87,000 your employer contributed £41,500 to your pension, and you contributed £6,000, making your adjusted income £122,500 and not affecting your annual allowance which would have remained at £40,000. (Although you would not have reached the threshold income of £110,000 I am assuming the salary sacrifice was to avoid the tapered annual allowance and you would have been caught by the anti-avoidance rules.)

If after, then your salary was £122,000 your employer contributed £41,500 to your pension,  and you contributed £6,000 making your adjusted income £157,500 reducing your annual allowance to £36,250.

The above assumes you have no other income, but any other taxable income (e.g. rent, dividends, interest) would need to be added in.

In either situation above, you would need to have relied on existing carry forward allowances to ensure you did not make excess pension contributions.

The thresholds are higher this year.

Just to note, last tax year is finished, so your income, salary sacrifice and pension contributions you made last year have no effect on your allowance this year. (Except by potentially having used some previous year's carry forward allowances.)