Tax Code / Pension Query

Lisa1978

I would appreciate some advise on my tax code and information regarding pension payments. 

Below is a summary of my tax code (1057L) from HMRC : 

Personal Allowance	12570
Personal Pension Payments	788
	13358
Child Benefit	-659
Profit from Rental property	-1627
Medical Insurance from work	-501
	10571

I contribute Gross £1,575 in pension payments per year (£131.25 a month gross/nett is £105 deducted from my payslip).  
Is it correct that the 'personal pension payments' above states £788 as this is half of what i contribute? Should this figure be £1575? 

Thanks. 

kuratowski

You are getting 20% relief at source when you pay the payments to the SIPP provider.  However, presumably your tax rate is 40%, so you want another 20% relief which is given by "extending your basic rate band", i.e. moving some of your income from the 40% band to the 20% band.  But PAYE works by giving you a "tax free" amount so each pound added to your tax code goes from 40% to 0%.  Hence the amount needs to be half in order to grant 20% relief.

Lisa1978

kuratowski said:

You are getting 20% relief at source when you pay the payments to the SIPP provider.  However, presumably your tax rate is 40%, so you want another 20% relief which is given by "extending your basic rate band", i.e. moving some of your income from the 40% band to the 20% band.  But PAYE works by giving you a "tax free" amount so each pound added to your tax code goes from 40% to 0%.  Hence the amount needs to be half in order to grant 20% relief.

Hi, yes i'm a 40% tax payer.  Great, i understand know why the only add the £788 and not the full amount. Thanks.