Pension allowance and being thick and Railways Pension Scheme

apollo9

I always seem to get this wrong.
I realise the pension allowance is £40000 per annum
I am already part of an employer pension.

So if the employers pension input is  say £10000, then presumably I have £30000 left I can put in this year.
However due to tax relief is the maximum (cash) I can put in £30000 x 0.75% (due to 25% tax relief, if I am a higher rate tax payer)  = £22500?
Also am I better off, putting this into a SIPP or buying BRASS as I am part of the Railways Pension Scheme?
thanks

Preacher64

The way the Annual Allowance figures are calculated for DB schemes is a bit different to the flat £40000 total contribution figure used for DC pensions. It is taken to be the capitalised value of the increase in accrued benefits over the tax year. (Thanks Google!). The Pension Administrators should be able to help you with the figures required to work out what you can contribute but the total will include your contributions, employer contributions and your total tax relief and based around your accrued scheme benefits and AVC’s.
I’m in the RPS and also in Brass. Brass doesn’t have any huge benefits over a SIPP other than the tax element is sorted out for you, which it’s not for a HR taxpayer with a SIPP. The fund selections are very limited and not overly adventurous and you have to take your scheme benefits and any Brass holdings at the same time. A SIPP may afford you more flexibility.

apollo9

Thanks, given that there maybe some 'allowance' left, do I just deduct that from the £40k and then pay 80% of it into a SIPP, letting the provider collect the rest?

Preacher64

If you’re a higher rate tax payer, the provider will only add the basic rate equivalent and you will have to reclaim the rest via HMRC. 

Dazed_and_C0nfused

And "the rest" is not necessarily an extra 20%.

Any higher rate tax relief depends on your overall tax position and may be roughly an extra 20% but as the relief at source pension contribution simply increases the amount of your basic rate tax band then any higher rate tax relief is dependent on how much higher rate tax you would otherwise be paying.

xylophone

https://forums.moneysavingexpert.com/discussion/comment/77846010/#Comment_77846010
may be of interest.