Calculating final pension payment

dont_use_vistaprint

Can someone please advise anything I need to consider / calculate I may be overlooking .  I need to make a final one off pension payment this tax year to reduce my tax bill

I make salary sacrifice of £1500 a month, increased from £500 a few months ago. My employer adds around £700 pcm although it was a little less  earlier in the year. Total salary sacrifice  this tax year is £9000

My final pay for March shows taxable pay of 129,000 and employers pension of £9000. 

The amount they add to my pension  isn’t summarised but I can find it if needed? 

my earnings from interest in non isa savings should be less than £500 this year, maybe just over with P2P income 

Last years P11D was £5100, I expect the same this year maybe more up to £8000 but I won’t receive it before making the final pension payment , is this a problem ? 

i want to make a final payment to keep my income below £100k to gain the full personal allowance and avoid tax on the small amount of non ISA savings 

is it as straightforward as transferring £29000 into my pension or do I need to calculate the tax, include the P11D estimate etc

many thanks 

Dazed_and_C0nfused

Any relief at source pension payment you make won't reduce your (taxable) income.

It will however reduce your adjusted net income, which is what your Personal Allowance is calculated from.

Your taxable pay, taxable interest and taxable company benefits all form part of your adjusted net income.

You cannot deduct the salary sacrifice contributions as they are actually employer contributions.  But they mean your salary of £138k became taxable pay of £129k.

Remember you only pay the net amount of relief at source contributions.  So if you wanted to reduce your ANI by £5,000 you would only pay £4,000 as the basic rate tax relief is added to make a gross contribution of £5,000.

The annual allowance could well come into play here and limit how much you can contribute as you already seem to be at £18k just from your employer's contributions.

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/annual-allowance/#:~:text=For each tax year since,is £40,000 per annum.

Marcon

dont_use_vistaprint said:

Can someone please advise anything I need to consider / calculate I may be overlooking .  I need to make a final one off pension payment this tax year to reduce my tax bill

I make salary sacrifice of £1500 a month, increased from £500 a few months ago. My employer adds around £700 pcm although it was a little less  earlier in the year. Total salary sacrifice  this tax year is £9000

My final pay for March shows taxable pay of 129,000 and employers pension of £9000. 

The amount they add to my pension  isn’t summarised but I can find it if needed? 

is it as straightforward as transferring £29000 into my pension or do I need to calculate the tax, include the P11D estimate etc

many thanks 

Two comments: are you sure that you can make an 'instant' pension payment, given that it must be with your provider by close of play on Tuesday (the end of the financial year); and do you have any scope for carry forward, given that paying another £29,000 will (as Dazed has already highlighted) take you over the annual allowance of £40K?

dont_use_vistaprint

Made the payment on Friday looks like exceed the 40k if includes £9000 SS plus 7000 employer contributions and grossed up one off 30 to 37500.

Previous years were well under this limit so hopefully I can fix this on the tax return ?

Albermarle

dont_use_vistaprint said:

Made the payment on Friday looks like exceed the 40k if includes £9000 SS plus 7000 employer contributions and grossed up one off 30 to 37500.

Previous years were well under this limit so hopefully I can fix this on the tax return ?

If you had sufficient unused allowance in the last three years , then no need to inform HMRC specifically about going over the £40K . They should take the unused allowance into account automatically . However it is always possible they may ask you at some stage to confirm the figures , so just keep some records just in case.

dont_use_vistaprint

Thank-you I guess I should be able to confirm this viewing the tax calculation when I do the self assessment ?

I assumed I would have to elect to move some into previous years when entering the figures 

  

Dazed_and_C0nfused

dont_use_vistaprint said:

Thank-you I guess I should be able to confirm this viewing the tax calculation when I do the self assessment ?

I assumed I would have to elect to move some into previous years when entering the figures 

  

No, you just include the qualifying contributions.

It is up to you to keep separate figures in case HMRC ever open an enquiry into your return.