Max Tax Relief with both DB and DC contributions...

Funkyfreddy

Quick query (I think) please if that's OK,

Appreciate that my contributions, round figure of say £4,500pa into my occupational DB scheme are not counted against my Annual Allowance usage. That comes from the benefits in the scheme itself.

I also contribute into a personal scheme. If my earnings were £30kpa is the most I can contribute into that and benefit from tax relief £30k (£24k nett) – if so I'd be seeing tax relief on £34,500 or is that reduced to £25,500 (£20,400 net)  so that I'm only seeing tax relief in total on £30k.

Apologies if badly worded, it's never been an issue but I have the opportunity (I think) to do so this year.

MTIA.

Dazed_and_C0nfused

What will your salary be?

What will your taxable pay be?

Funkyfreddy

Dazed_and_C0nfused said:

What will your salary be?

What will your taxable pay be?

Translated for this example...
£30k Gross Pay
£25,500 Taxable 
Thanks D&C

Dazed_and_C0nfused

I think £25,500 (gross) is your tax relief limit for relief at source DC contributions.

See example of Doug here,
https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/interaction-of-tax-relief-and-annual-allowance/

Funkyfreddy

Thanks again Dazed,

In reality my Gross Earnings/Taxable pay are a little higher and as I won't have details of AA usage from my DB scheme membership this tax year it's possibly I could exceed the Annual Allowance of £40k with the contribution I was thinking of making – as Doug would !

The input amount from my work scheme for the last tax year together with my personal contributions do mean I have some carry over from last year (and the previous two) so I should be OK.

[edit] but in terms of contributions into my own scheme I'll work with my taxable pay figure taking into account my workplace £4,500.

I think !

Thanks again for the link

AlanP_2

Salary less personal DB Pension Contributions for the gross amount you can put in to a DC pension as part of the "relevant income" test.

Increase in benefits value over the year for the DB scheme's AA value as you say, then add your gross DC contribution to arrive at your overall AA usage level for the year.

Unfortunately DB statemements cvan only be sent a few months after tax year end so you have to calculate / take a view on likley AA level ahead of official document.

There are a few online AA calculators for DB schemes, one of those may help you. 

Funkyfreddy

Thanks AlanP, yep I seem to have got it now.
It would be good to have even a ball park AA figure for the current period if there are any suggested online calculators to take a look at, will hunt around. 

zagfles

What kind of DB pension is it, final salary, or career average? Or both (some schemes used to be FS but then moved to CARE but retaining a FS link for previous service). This can make a big difference, so make sure you use the appropriate calculator.

But have you got the PIAs from previous years? Unless you made large contributions in previous years, or had big payrises etc if in a FS scheme, you'd likely have loads of carry forwards available. Have you worked out how much?