Earning 107k trying to get my head around 60% tax and what to do

Dazed_and_C0nfused

There is no tax relief with a LISA.

You get the bonus and any interest isn't taxable.

With a SIPP you get basic rate tax relief (£1,000 if you pay £4,000) and the gross contributions has two benefits,

1.  It increases your basic rate band.

2.  It reduces your adjusted net income (used to calculate your Personal Allowance).

Your employer's contributions don't benefit you at all tax wise, they simply add to your pension fund

pred02

Thanks. I think most sensible thing to do at this stage is to pay in £4000k into Lisa. 25% bonus is on par with tax saving as in SIPP but when I withdrawal from the LISA it will be tax free.

For future years I should pay an accountant. I get 12% workplace pension contribution on top of my 8% - 20%. This is where I have been saving for pension, LISA has been a top up to that as I have had extra cash and I also failed to contribute much in my 20s (e.g. traveling, studying, working in 3rd world countries).

My income is likely to go up next year (£120k) at this stage whether is it worthwhile more:
1. Continue to put 8% salary sacrifice plus 12% - 20% workplace pension or
2. Do not put any money into workplace pension but put into SIPP to reduce the over £100k tax liability.

Hope this makes sense. 

Dazed_and_C0nfused

Salary sacrifice would do the same job, just in a different, usually more tax efficient way.

By sacrificing into a pension you have less taxable income so avoid paying tax and NI on the amount sacrificed.  

Personally I think it would be madness to stop contributing and lose the free 12% from your employer.  The general consensus is to make you max employer matching, so if they will match to say 15% you pay enough to get the full 15%

kimwp

Why on earth would you put money into a Sipp instead of workplace pension??