Tax and pension

BarryLaddon

I would be very grateful for your thoughts on this
I estimate I may earn approximately £116,000 this tax year
I will pay £8000 into my company pension but this is the max I can pay.
That would leave £108,000 taxable income
Theoretically could I pay £8,001 into a SIPP to take me under the £100,000 threshold and thus not lose a proportion of personal allowance etc? Would that work?
I am grateful for your thoughts and experience of similar situations 

Dazed_and_C0nfused

It's not that simple.

What method is used to get the current £8k into your pension?

Net pay
Relief at source (RAS)
Salary sacrifice 

If relief at source is the £8k the net or gross contribution?

Will you be making the extra £8,001 contribution to a RAS scheme?  If so is this the proposed net or gross contribution?

Why £8,001?  You only start to lose your Personal Allowance once your adjusted net income reaches £100,002.

It is adjusted net income, not taxable income, which determines your Personal Allowance.  This means you need to factor in all taxable income as part of calculating your adjusted net income.  Even income which might be taxed at 0% like interest (or dividends).

Albermarle

I will pay £8000 into my company pension but this is the max I can pay.

It is unusual to have a limit ?

400ixl

Why can't you pay more than £8k into your company pension? Understand many companies don't contribute more over a certain level, but doesn't usually stop you paying more in. 

Really worth checking this out as it has NI as well as tax advantages in many circumstances.

FlimFlam01

BarryLaddon said:

I would be very grateful for your thoughts on this
I estimate I may earn approximately £116,000 this tax year
I will pay £8000 into my company pension but this is the max I can pay.
That would leave £108,000 taxable income
Theoretically could I pay £8,001 into a SIPP to take me under the £100,000 threshold and thus not lose a proportion of personal allowance etc? Would that work?
I am grateful for your thoughts and experience of similar situations 

You only need to pay 6,400 into a SIPP as you'll get 25% added by the government taking you up to your £8,000 required amount - and when you do your SA you'll get back what you'll have paid at effectively 60% between 100,000 and 108,000.  Absolutely make sure you do all this.