Tax Relief on Pension Contributions

POSH_JASON

Hi, I'm hoping someone can check my calculations, I want to try to avoid paying any tax at 40% this year by putting additional money in to my pension.

My salary for 21/22 is £59,570
My medical insurance benefit is £700
This gives me a total income of £60,270

So far this year I've paid £3095 in to my pension from my salary, the pension company than adds relief at source of 20% so this has become £3868.75 paid in.

At present my salary is £10,000 above the 40% threshold. 

Do I need to pay in an additional £6905 into the pension this tax year, it will mean my contribution has been £10,000, with tax relief of 25% the contribution will be £12,500.

Or do I need to pay in £4905, it will mean my it will mean my contribution has been £8,000 (£3,095 + £4,905) with tax relief of 25% the contribution will be £10,000.

I'll claim additional tax relief from HMRC as I should get 40% not 20%

Or have total misunderstood how this works and should a different additional amount??

Thanks for any help.
 

Dazed_and_C0nfused

Salary is irrelevant.

What do you expect the taxable pay on your P60 to show for 2021:22?

How much other taxable income such as interest or dividends do you have?

[Deleted User]

You haven’t misunderstood. The second option is correct at £4905 which, along with your current contribution, grosses up to £10000 reducing your adjusted net income by this amount. Although perhaps give yourself a bit of leeway?

POSH_JASON

There is no other income, just my salary of £59,570 and my P11D which will show my medical insurance benefit of £700

Albermarle

Note that first time around you need to inform HMRC ( no need to do a self assessment ) of your gross pension contributions .
All being well there will be a tax rebate of around £2000.

Then HMRC will adjust your tax code for the next tax year on the assumption you will make a similar level of contributions . So you will get more take home pay but no rebate later.