Working out pension contribution...?

C_Mababejive

Hi all,
I expect this is a really easy question but as im rubbish at maths and dont fully understand how taxation and pension tac relief works , ill ask it anyway and i will slot in some example figures just to work with.

A person has a total annual income in 22/23 as per the following example;

PAYE income 60,000
Unsheltered dividend income 6000
taxable savings income 6000

Making a total of 72000

They wish to make the right amount of personal pension contribution such that they will be taxed as if they were in the basic rate band and the higher zero rated dividend and savings allowances would apply.

How is the nett pension contribution calculated?

Thanks all,

Dazed_and_C0nfused

It would £17,384 as a net RAS contribution.

That would ensure that all income fell within the (extended) basic rate band.

C_Mababejive

Dazed_and_C0nfused said:

It would £17,384 as a net RAS contribution.

That would ensure that all income fell within the (extended) basic rate band.

Thanks ,could you elaborate on how it is calculated please? Ill print and file the solution for next year PS whats RAS?


i have it
(72000-50270)/100 *80

Dazed_and_C0nfused

So your taxable income is £72,000.

The basic rate threshold is £50,270.

You need to increase this by £21,730 to be deemed a basic rate payer.

A net RAS contribution of £17,384 is grossed up to £21,730.

RAS = relief at source, the normal method used to make contributions to a SIPP or personal pension.