Help with contribution calculation

Alistair31

Wondering if someone would be so kind to help me calculate how much my partner should contribute to his pension to avoid higher rate tax, resident in Scotland. 

Gross Salary: £46,450
Employee DC Pension Contribution: 5% 
Employer DC pension contribution: 10% 
I believe Scotland’s higher rate tax kicks in at £43,431 so how do I/we work out what to change the 5% to, to avoid paying any higher rate tax.

Grateful if a calculation can be shown rather than just a result  

thanks in advance  

Dazed_and_C0nfused

What type of pension contribution is he paying?

Net pay or relief at source?

thickasabrick

Alistair31 said:

Wondering if someone would be so kind to help me calculate how much my partner should contribute to his pension to avoid higher rate tax, resident in Scotland. 

Gross Salary: £46,450
Employee DC Pension Contribution: 5% 
Employer DC pension contribution: 10% 
I believe Scotland’s higher rate tax kicks in at £43,431 so how do I/we work out what to change the 5% to, to avoid paying any higher rate tax.

Grateful if a calculation can be shown rather than just a result  

thanks in advance  

I find the Listentotaxman UK salary Tax calculator useful for running through different contributions to my pension.
Using your figures
I earn (pre tax) 46450
Pension contribution 5% (£ 2322.50 ) £193.24 per month
Tax region Scotland
It is showing 0.6 % £285.98 tax due on the 41% tax rate 

Upping your pension contribution by 1.6% will reduce that to 0
Change the pension contribution to 6.6% ( £ 3065.70 ) £255.48 per month
Gives a net monthly take home pay of £2717.67 compared to £2754.97

https://listentotaxman.com/

Dazed_and_C0nfused

thickasabrick said:

Alistair31 said:

Wondering if someone would be so kind to help me calculate how much my partner should contribute to his pension to avoid higher rate tax, resident in Scotland. 

Gross Salary: £46,450
Employee DC Pension Contribution: 5% 
Employer DC pension contribution: 10% 
I believe Scotland’s higher rate tax kicks in at £43,431 so how do I/we work out what to change the 5% to, to avoid paying any higher rate tax.

Grateful if a calculation can be shown rather than just a result  

thanks in advance  

I find the Listentotaxman UK salary Tax calculator useful for running through different contributions to my pension.
Using your figures
I earn (pre tax) 46450
Pension contribution 5% (£ 2322.50 ) £193.24 per month
Tax region Scotland
It is showing 0.6 % £285.98 tax due on the 41% tax rate 

Upping your pension contribution by 1.6% will reduce that to 0
Change the pension contribution to 6.6% ( £ 3065.70 ) £255.48 per month
Gives a net monthly take home pay of £2717.67 compared to £2754.97

https://listentotaxman.com/

But if they are relief at source contributions the initial 5% will be grossed up to £2,903 and there would only be £117 taxed at 41% (once higher rate relief on the relief at source contribution is taken into account).

Alistair31

Dazed_and_C0nfused said:

What type of pension contribution is he paying?

Net pay or relief at source?

Really not sure, wage slips don’t specify.

Dazed_and_C0nfused

If you are contributing then there are two possibilities,

Net pay - this is is where you have a salary of say £50k and if you contribute 10% to a pension your taxable pay (the amount that ends up showing on your P60) is only £45k

Relief at source - this is taken from your net pay, after tax had been deducted so in the example above your salary and taxable pay would both be £50k.  When the pension contribution is added to your pension fund the pension company add basic rate tax relief so a £5k contribution is grossed up to £6,250.

Until you know which method you are currently contributing by, and whether the additional contributions are going to use the same method, its impossible to know the answer to your original question.

Alistair31

In which case it is net pay arrangement. @Dazed_and_C0nfused

Dazed_and_C0nfused

Alistair31 said:

In which case it is net pay arrangement. @Dazed_and_C0nfused

Your original post said this,

Gross Salary: £46,450

Employee DC Pension Contribution: 5% 

Employer DC pension contribution: 10% 

I believe Scotland’s higher rate tax kicks in at £43,431 so how do I/we work out what to change the 5% to, to avoid paying any higher rate tax.

So your taxable income is only actually £44,127.

If you increased your percentage to 7% your taxable pay would drop to £43,198 (£46,450 - £3,251 = £43,198.

I have assumed you can only contribute whole % points but you may be able to get closer to £43,430 if you can be more exact with the % contribution.