Pension contributions

xylophone

https://www.gov.uk/child-benefit-tax-calculator

Above might be useful.

Pat38493

Russyarnold said:

Thanks for your response. Yes I'm going to take into account all other incomes as well.
I have one more question on claiming tax relief for pension contributions.
Long story short, I don't want to put 15k into my current company provided pension but want to put into a Nest pension pot from my previous employer. Nest says that any amount I'll deposit will come with 20% top-up and remaining 20% tax relief (as a higher rate payer) must be claimed from HMRC.
If I pay into Nest £100
1. How much will that be once after 20% top-up is included?
2. As I understand, ear 20% should be claimed as cash deposit from HMRC? How much that is going to be?

I'm not that bad with maths, but wanted to know how much I need to put into pension pot to make it £15K.

Thanks.

Later on you mention Retireready so I guess your employer pension is with Aegon as Retireready is one of their platforms.

The stuff about 20% tax relief added on and so on is standard for all pensions, it is not some kind of special benefit of Nest.  Pension providers often state all these things on their websites as if it’s something only they can do, but a lot of it is standard across the board.

As Nest charges a fee for each deposit you make, I suspect that most people on these boards are not using Nest (also check for exit fees as I might be remembering this wrong but I had an idea that Nest charges exit fees if you want to leave later on).

If you want to pay in a one of sum via your work pension, it is better to do it via your employer payroll.  If you want to pay a lump sum directly into your employer pension, bypassing your employer, you need to check with them to make sure they can cope with that situation in terms of applying the correct tax relief credit back.

If not there is not just Next, there are plenty of other providers available who would be more often mentioned on these forums like AJ Bell, Interactive investor, Fidelity, Hargreaves’s Lansdown and others

Dazed_and_C0nfused

Russyarnold said:

Dazed_and_C0nfused said:

If I pay into Nest £100
1. How much will that be once after 20% top-up is included?
2. As I understand, ear 20% should be claimed as cash deposit from HMRC? How much that is going to be?

I'm not that bad with maths, but wanted to know how much I need to put into pension pot to make it £15K.

It's a 25% "top up".

1.  £125 (of which £25 is the basic rate tax relief (20% of the gross contribution).

2.  You cannot claim 20% extra from HMRC.  The gross contribution increases your basic rate band meaning more tax can be paid at basic rate and less at 40%.  The exact benefit will depend on how much 40% tax you would otherwise be liable to.  And If you would be liable to HICBC it could quite a bit more than 20% extra saving.

If you contribute £12k that will become £15k in your pension fund with the basic rate tax relief added.  That will not reduce your taxable income but it does reduce your adjusted net income by £15k.  And adjusted net income is used to calculate the HICBC.

Have you checked out any initial fee charged by Nest?

While I am not sure on Nest charges, I found the below on their website on single additional contributions and tax relief. Not sure how to claim. Have anyone done this before? No I don't file self assessment as I have no additional income sources.

Single additional contributions

You can make an additional contribution at any time.

Our pension calculator helps you work out how much an additional contribution now could increase your pot’s total at retirement.

When you make an additional contribution, we claim the 20% basic rate of tax relief from HMRC and add it to your pot. Higher rate taxpayers can claim any additional tax relief from HMRC. If you’re not eligible for tax relief, please update your details before proceeding.

If you definitely won't be liable to HICBC then you just need to contact HMRC and let them know you are making RAS (relief at source) pension contributions and make it clear what the gross contribution is.

If you will be liable to HICBC, even just 1%, then you will need it file a tax return and include the RAS pension contributions on your return.

But you can still make a provisional claim via your tax code.  And the return will finalise things.

justwhat

Salary sacrifice is your best route tax/nic is reduced from your payslip. Any other method does not reduce your NIC. (i would use this method to get my earnings below the 50k threshold, with a margin for overtime/interest on savings). If my calculations were messed up or i had an influx in earnings i would dump a lump sum into NEST.

If you want to put lump sums into NEST it is easy to do via Debit card. 

QrizB

^ This is my approach.

I've set my salsac such that I should end the year under the HR threshold, but have a Vanguard account that I can pad in February or March if my income for the year is higher than expected.

Albermarle

As Nest charges a fee for each deposit you make, I suspect that most people on these boards are not using Nest (also check for exit fees as I might be remembering this wrong but I had an idea that Nest charges exit fees if you want to leave later on).

No exit fees and the 1.8% is not charged on transfers in, just on new contributions, which is a bit painful.