Calculation required to ensure offset HRT - any final help appreciated

Kalashnikov

Long story short this year my employer has not let me increase my salary sacrifice pension contributions at work. So i had both

Workplace 16% ish after a few small changes

SIPP vanguard 18K + 4.5K (20% relief top up) - Then i called tax office to refund me 4.5k HRT relief, which came in through my payslip today- tax code adjusted to 2306L

My gross final looks like

Gross final - 82,931

Tax free - 23,069

Taxable - 59,862

Total Tax 16,444 made up of

7,500 at 20%

8,944 at 40% --- (its this i want to now make a final topup payment to offset any HRT) I know I am over the 40k allowance but have carry over to use from 18/19

What amount should i be paying into vanguard to avoid the 40% tax ?

Kalashnikov

Here is what matches my payslip final for 20/21

Dazed_and_C0nfused

You are getting tax code allowances and your actual tax position mixed up.

Your tax code is just a provisional attempt to collect the correct amount of tax, it is highly unlikely you actually have £23,069 "tax free".

Can you confirm how the tax code is made up?

What do you expect your P60 to show your taxable pay as?

Do you have any other income such as company benefits, savingsc interest or dividends to take into account?

Kalashnikov

My tax code is usually 12500 but they adjusted after I sent my sip contribution letter. So I get back the hrt relief. If you see up my payslip for March a refund.

taxable should be 82931

Dazed_and_C0nfused

You are getting mixed up between tax code allowances, which are ultimately irrelevant, and how your tax is actually calculated.

You are interested in the actual final picture for the year so your tax code allowances of £23,069 don't come into the equation.

As things stand it is impossible to give you an accurate answer.

Kalashnikov

Dazed_and_C0nfused said:

You are getting mixed up between tax code allowances, which are ultimately irrelevant, and how your tax is actually calculated.

You are interested in the actual final picture for the year so your tax code allowances of £23,069 don't come into the equation.

As things stand it is impossible to give you an accurate answer.

It’s never impossible. I have all my numbers here. How much I paid via SS and via SIPP and have access to my tax account 
my base salary was 86520 with 11k variable bonus. 

Dazed_and_C0nfused

You state your taxable income should be £82,931 but that isn't the whole story and you also seem to think you have a tax free amount of £23,069 but you don't.

As it's not impossible from the information you have provided I will leave you to it and bow out now.

It’s never impossible. I have all my numbers here

Kalashnikov

Agreed I don’t have a 23k tax allowance but this is what the tax office used adjust for pension contribution tax relief. I mate a contribution of 18k as mentioned in OP. I seriously don’t want to miss out on my carry over allowance. 

Thankfully this year am salary sacrificing 47% so won’t need to deal with this nonsense 

Kalashnikov

Bumping this 

kuratowski

In the end of year tax calculation, the basic rate band (BRB) gets extended by the "grossed up" part of your SIPP contribution.  Grossed up means adjusted to the amount before basic rate tax.

The standard personal allowance is 12500.  The standard basic rate band is 37500.  The basic tax rate is 20%.

Assumptions that the total taxable pay and SIPP contributions you have quoted are the exact amounts, that you are in England, with no other income, no taxable benefits, no reliefs, no other allowances but the standard personal allowance.  The exact figures below might change if any of these assumptions is incorrect, but the method should still work so you can substitute your own numbers.

Current situation

Taxable income 82931

Personal allowance 12500

Income after allowances 70431

BRB 37500 + 18000 / (1 - 0.20) = 60000

60000 taxed at 20% 12000

10431 taxed at 40% 4172.40

Total tax due 16172.40

You wish to avoid paying any 40% tax, so therefore you make gross contributions of 10431 to your SIPP.  The net amount to pay in is 10431 * (1 - 0.20) = 8344.  Given the previous contribution of net 18000 this means the total net contributions paid into the SIPP are 26344.

Assuming extra contribution

Taxable income 82931

Personal allowance 12500

Income after allowances 70431

BRB 37500 + 26344 / (1 - 0.20) = 70430

70431 taxed at 20% 14086

1 taxed at 40% 0.40

Total tax due 14086.40

By paying an extra 8344 net into the SIPP, you have saved tax of 16172 - 14086 = 2086.

Kalashnikov

kuratowski said:

In the end of year tax calculation, the basic rate band (BRB) gets extended by the "grossed up" part of your SIPP contribution.  Grossed up means adjusted to the amount before basic rate tax.

The standard personal allowance is 12500.  The standard basic rate band is 37500.  The basic tax rate is 20%.

Assumptions that the total taxable pay and SIPP contributions you have quoted are the exact amounts, that you are in England, with no other income, no taxable benefits, no reliefs, no other allowances but the standard personal allowance.  The exact figures below might change if any of these assumptions is incorrect, but the method should still work so you can substitute your own numbers.

Current situation

Taxable income 82931

Personal allowance 12500

Income after allowances 70431

BRB 37500 + 18000 / (1 - 0.20) = 60000

60000 taxed at 20% 12000

10431 taxed at 40% 4172.40

Total tax due 16172.40

You wish to avoid paying any 40% tax, so therefore you make gross contributions of 10431 to your SIPP.  The net amount to pay in is 10431 * (1 - 0.20) = 8344.  Given the previous contribution of net 18000 this means the total net contributions paid into the SIPP are 26344.

Assuming extra contribution

Taxable income 82931

Personal allowance 12500

Income after allowances 70431

BRB 37500 + 26344 / (1 - 0.20) = 70430

70431 taxed at 20% 14086

1 taxed at 40% 0.40

Total tax due 14086.40

By paying an extra 8344 net into the SIPP, you have saved tax of 16172 - 14086 = 2086.

This is wonderful, You calculated 16172 of tax due based on some assumptions not far from 16444. Thank you 
just to be clear 82931 is my taxable pay - because through salary sacrifice i have already contributed 11,478.32 and Employer 5,061.42 so total into my workplace pension pot is 16,539.74. None of this attracts tax relief as its before gross salary. 
16539 + 22500 (vanguard sipp) = 39,039 - just under the 40k allowance - 
Question - making this additional sipp contribution of 8344 - will take me over - but can i use 2017/18 carry over allowance (is there any paper work do to  ? ) 
Thank you for your helpful comment and calculations