Adjusted nett income and pension contributions - help please!

AlphaWaves

Hi. I have some queries around adjusted net income that I was hoping some of you may be able to assist with.

For the purpose of tax planning and childcare allowances I need to ensure my adjusted net income stays below £100k as such I am reviewing my pension contributions for any additional contributions I can make to ensure that I stay below this figure. 

Could I kindly check on the below points:

(a) my employer pays a sum into my personal pension each year - for calculating my adjusted nett do I count this sum towards my taxable income or not? 
(b) I assume I cannot deduct my employers contribution from my nett income given there is no grossing up tax relief applied - is this correct? 

I understand that my max annual allowance for pension contributions is £40k, which includes my own contributions, grossing up, and employers contributions 
(c) does the tax relief that counts towards the £40k threshold include only the grossed up amount applied at source? or as a higher rate tax payer does this also include any tax relief I receive via my tax code.

many thanks 

Dazed_and_C0nfused

a) for clarity is this a normal employer contribution i.e. you contribute say 5% and they contribute 3% or is it a contribution they make due to you sacrificing some salary?

b) correct

c) yes.  Any personal tax saving is ignored for annual allowance purposes as it isn't part of the pension contribution.  For example if you pay £8,000 and the pension company adds £2,000 in basic rate tax relief it's a gross contribution of £10,000.  If that saves you say £3,500 in personal income tax or HICBC it's still a gross contribution of £10,000 even if ultimately the real cost to you was only say £4,500.

AlphaWaves

Dazed_and_C0nfused said:

a) for clarity is this a normal employer contribution i.e. you contribute say 5% and they contribute 3% or is it a contribution they make due to you sacrificing some salary?

b) correct

c) yes.  Any personal tax saving is ignored for annual allowance purposes as it isn't part of the pension contribution.  For example if you pay £8,000 and the pension company adds £2,000 in basic rate tax relief it's a gross contribution of £10,000.  If that saves you say £3,500 in personal income tax or HICBC it's still a gross contribution of £10,000 even if ultimately the real cost to you was only say £4,500.

Thankyou

regarding a) it’s neither. My employer makes a one off contribution to my personal pension rather than run their own scheme. No salary sacrifice.

so to check, if I understand your answers correctly and if for example my employer contributes 2.5k to my personal pension then I could make personal contributions of up to 30k per annum

e.g. 30k personal contributions plus tax relief at source of 7.5k plus 2.5k employer = 40k

and the additional saving on personal income tax via an adjusted tax code for being a higher rate tax payer doesn’t come into play. 

Correct? 

Dazed_and_C0nfused

Your normal annual allowance limit would be £40k but it is possible to contribute more using carry forward if you earn enough.

Any personal tax saving, however it is received is ignored.  You only ever include the basic rate relief the pension company adds.

Useful reading re employer contributions here,

https://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/employer-contributions-and-tax-relief/