Non-earner HR tax relief on £3600 Pens contribution?

jamesd

Yes, you get the relief and £369 is something you can probably find a use for.

You don't need to wait until you can file a tax return to get the relief. Just send HMRC a message saying that you're making £3,600 of gross pension contributions, please adjust my PAYE code to give the higher rate relief. Optionally add, I expect to do this each tax year until my 75th birthday.

jamesd

Simes122 said:

i complete a SA return. Probably don’t need to but Hmrc have never told me I don’t need to 

HMRC told me I didn't need to complete one for last year. I am still obliged to because of foreign peer to peer lending income. I'm not allowed to trust that they got it right...

SomeMadeUpName

jamesd said:

Simes122 said:

i complete a SA return. Probably don’t need to but Hmrc have never told me I don’t need to 

HMRC told me I didn't need to complete one for last year. I am still obliged to because of foreign peer to peer lending income. I'm not allowed to trust that they got it right...

Personally, I'ld never trust they got anything right, I check everything.

That's not to say I don't think they do a pretty good job, it's just that when it's my money I want to understand and audit all aspects.

SomeMadeUpName

Simes122 said:

I can’t get my head around if it’s worth it.  I think the effect is that the SIPP rises by £3600 for a net cost of £2553

the £3600 can be taken out with 25% tax free.  (£900) and £2700 taxed at 41% = £1593 net + £900= £2493. 

If I’d just taken £3600 at 41% I’d net £2124.  So it appears doing this via the SIPP would result in an advantage of £369pa to me vs taxman.

I agree on the £2124, the £2493 & the £369, but what is the £2553?  Surely the net cost of the £3600 rise in the pot is also £2124, as it is the £2880 you contribute, less the £756 you claim back via SA or tax code?

Simes122

SomeMadeUpName said:

Simes122 said:

I can’t get my head around if it’s worth it.  I think the effect is that the SIPP rises by £3600 for a net cost of £2553

the £3600 can be taken out with 25% tax free.  (£900) and £2700 taxed at 41% = £1593 net + £900= £2493. 

If I’d just taken £3600 at 41% I’d net £2124.  So it appears doing this via the SIPP would result in an advantage of £369pa to me vs taxman.

I agree on the £2124, the £2493 & the £369, but what is the £2553?  Surely the net cost of the £3600 rise in the pot is also £2124, as it is the £2880 you contribute, less the £756 you claim back via SA or tax code?

Trying to think how I got that - 2553 x 1.41 = 3600 I think.  Ie the effective net contribution with 41% relief in total?

SomeMadeUpName

Simes122 said:

SomeMadeUpName said:

Simes122 said:

I can’t get my head around if it’s worth it.  I think the effect is that the SIPP rises by £3600 for a net cost of £2553

the £3600 can be taken out with 25% tax free.  (£900) and £2700 taxed at 41% = £1593 net + £900= £2493. 

If I’d just taken £3600 at 41% I’d net £2124.  So it appears doing this via the SIPP would result in an advantage of £369pa to me vs taxman.

I agree on the £2124, the £2493 & the £369, but what is the £2553?  Surely the net cost of the £3600 rise in the pot is also £2124, as it is the £2880 you contribute, less the £756 you claim back via SA or tax code?

Trying to think how I got that - 2553 x 1.41 = 3600 I think.  Ie the effective net contribution with 41% relief in total?

Ah, OK.

Think what you were after was £3,600 x 59% = £2,124

Where 59% comes from 100% less the 41% in tax.