Confused about pension tax relief on low earnings

xylophone

https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/annual-allowance?utm_source=vanityurls&utm_medium=301&utm_campaign=/knowledge-literature/oracle-plus/annual-allowance

And see zagfles comment here

https://forums.moneysavingexpert.com/discussion/comment/78067440/#Comment_78067440

The annual allowance is £40k for everyone, except very high earners and those who've already flexibly accessed a pension.

Separately, there's tax relief limit which is 100% of your "relavant earnings" (employment income and a few similar types of income). That's gross including the tax relief.

dunstonh

I reached State Pension age last June and fully retired from my part time job on 31 July.   I earned £3007.72 as an employee.  I was contributing 8% to their DC pension and the employer contributed 12% (4% plus matching my 8%). 

Unsure whether the £3007 limit for a SIPP contribution this year (this afternoon!) was gross or net of the tax uplift, I'm browsing through some of the generic letters I've had from HL and their latest letter, "Pensions: top up by 5 April" says:

There is no £3007 SIPP limit.   The limits are pension contributions.  Not SIPP contributions.

You earned £3007.72.  That is less than £3,600 non/low earners limit.  So, the maximum pension contribution is £3,600.  You have already received pension contributions via the employer.  These need to be deducted from the £3,600.  The difference is what you can contribute to a pension.

Pension contributions are gross.  HMRC limits are gross.  What you pay as an individual is net. 

twiglet98

I scraped maths O Level with an E in 1972. It may as well be double Dutch.

I'm so grateful to those posters who understand the figures for trying to help me make it make sense.

zagfles

dunstonh said:

I reached State Pension age last June and fully retired from my part time job on 31 July.   I earned £3007.72 as an employee.  I was contributing 8% to their DC pension and the employer contributed 12% (4% plus matching my 8%). 

Unsure whether the £3007 limit for a SIPP contribution this year (this afternoon!) was gross or net of the tax uplift, I'm browsing through some of the generic letters I've had from HL and their latest letter, "Pensions: top up by 5 April" says:

There is no £3007 SIPP limit.   The limits are pension contributions.  Not SIPP contributions.

You earned £3007.72.  That is less than £3,600 non/low earners limit.  So, the maximum pension contribution is £3,600.  You have already received pension contributions via the employer.  These need to be deducted from the £3,600.  The difference is what you can contribute to a pension.

Pension contributions are gross.  HMRC limits are gross.  What you pay as an individual is net. 

Employer contributions do not need to be deducted from the tax relief limit. 

Employee contributions might need deducting depending on how they were taken.

If RAS, then they will need deducting.

If salary sacrifice, they won't (as they are technically employer contributions)

If "net pay", then it's debatable, and might depend whether you actually got any tax relief on them (ie did you earn enough to use your personal allowance).

Do you know which it was?