Reduced personal allowance question

supermassiveblast

Hello

Noob here. I am helping someone out with a tax return and cannot work out how HMRC are calculating their reduced personal allowance. I know they salary sacrifice and also as a result their tax code changed a few times through the year

Pay from all employments                                                           £117,720.00

plus benefits and expenses received                                          £2,020.00

minus allowable expenses                                                          £414.00

Total from all employments                                                         £119,326.00

Dividends from foreign companies                                             £121.00

Interest from UK banks, building societies and securities etc    £205.00 

Total income received                                                                 £119,652.00

minus Reduced Personal Allowance                                          £9,182.00

A SIPP payment of £10,100 was made, and I know that increases the 20% tax rate for them, but unsure how the £9182 figure is arrived at?

Reason being the total tax due is then £33,942.60, but listentotaxman says for £119652 income, there should be £7803 tax allowance, and £33159 due.

Thanks
SMB.

Dazed_and_C0nfused

Is the SIPP contribution the gross or net amount?

Was there any Gift Aid?

supermassiveblast

The £10,100 was from net income, £12625 was the value that hit the SIPP.

Yes, £250 gift aid.

Dazed_and_C0nfused

supermassiveblast said:

The £10,100 was from net income, £12625 was the value that hit the SIPP.

Yes, £250 gift aid.

From the information you've given Adjusted net income is £106,777 (119,652 - 12625 - 250).

As this is £6,777 above the tapered Personal Allowance threshold of £100k the Personal Allowance is reduced to £9,182 (PA is reduced by £1 for every £2 that ANI is above £100,000).

supermassiveblast

OH!!! DOH!! Thank you so much. 

Dazed_and_C0nfused

supermassiveblast said:

OH!!! DOH!! Thank you so much. 

An interesting exercise is to look at the tax calculation without any of the RAS pension contributions and note the bottom line (do not submit the return!).

Then add in the pension contributions and compare the new result.

You might be pleasantly surprised just now tax efficient those pension contributions have been 😀.

Once the return is correct file it as normal.