Tax Bracket and Pensions

chelt_Robin

If I earn £53,000 a year and pensions contributions are deducted by my employer totalling £4,000 for the year which tax bracket do I fall in. Will it still be the Lower rate because after the £4,000 is deducted I am below the 40% threshold. 

Once I have reached the 40% threashold do I need to reclaim the addtional 20% tax reflief on my contributions? 

Thanks 

Dazed_and_C0nfused

Are you Scottish resident for tax purposes?

What method is used to pay the contributions,

Net pay

Relief at source

Salary sacrifice

What do you expect your P60 will show your taxable pay for the year as?

Also, there is no fixed additional 20%, higher rate tax relief depends on your overall tax position.

chelt_Robin

I'm in England and thanks 

chelt_Robin

my pension contributions are taken off my pay slip and payed into the company source and pre tax.

Dazed_and_C0nfused

my pension contributions are taken off my pay slip and payed into the company source and pre tax

That means there is no extra tax relief to claim.

Your P60 will show taxable pay of £49,000.

The £4,000 pension contribution has meant you have avoided paying tax on £4,000 of your income (at a mix of 20% and 40%).

chelt_Robin

Thanks @Dazed_and_C0nfused , so falling into the lower rate tax band. Thanks for confirming. I thought that was the case, but someone said my tax code should be at the 40% rate 

Dazed_and_C0nfused

chelt_Robin said:

Thanks @Dazed_and_C0nfused , so falling into the lower rate tax band. Thanks for confirming. I thought that was the case, but someone said my tax code should be at the 40% rate 

Presumably someone who didn't understand what method you were using to make your pension contributions 🙂