Putting bonus into pension

gerdo

hello all, I have pretty much put 100% of my salary this year into my pension. I am due my annual bonus this month, am I ok to put that into my pension before the end of year as I assume that forms part of my salary ?

And if I put it in a week or two before the end of year do I still get the tax back on it since it can take about 6 weeks for the taxman to refund?

Secret2ndAccount

Yes, your bonus is part of your salary. You can only get tax relief on 100% of your salary, including the tax relief. If your employer is taking the money out before tax applies you have no problem. If you are putting take-home pay into a SIPP, you should only put in 80% of your salary. The 25% top-up will take that to 100% of your salary. Any more and you are not entitled to the top-up.
It's the date your contribution goes in to the pension that matters. The tax top-up will apply from that date, irrespective of when it arrives.

gerdo

Thanks Secret2ndAccount, that answers my question

RacingDriver

Yes a bonus forms part of your taxable income and can be paid into your pension subject to you having sufficient annual allowance available.

The tax relief relates to when the pension contribution was made, not when the tax relief is received, so a pension contribution towards the end of the financial year may receive the tax relief the next financial year but it would still relate to the prior years contribution.

bjorn_toby_wilde

It’s worth making sure that the money actually hits your pension account before the year end.  Some providers can take a while to process payments, especially around year end. A week may not be enough.

Wyndham

I think the annual allowance may apply? Currently £60,000. I don't think you can put in more than this? Would be useful if someone who knows more than me could confirm.

RacingDriver

Wyndham said:

I think the annual allowance may apply? Currently £60,000. I don't think you can put in more than this? Would be useful if someone who knows more than me could confirm.

Currently annual allowance is £60,000, previous years it was £40,000.  You can use carry forward from the previous three years.

As well as the annual allowance you also have to have relevant earnings in the current financial year, in this case the bonus would be the relevant earnings, but could be applicable to others maybe topping up pension from savings.

MetaPhysical

RacingDriver said:

Wyndham said:

I think the annual allowance may apply? Currently £60,000. I don't think you can put in more than this? Would be useful if someone who knows more than me could confirm.

Currently annual allowance is £60,000, previous years it was £40,000.  You can use carry forward from the previous three years.

As well as the annual allowance you also have to have relevant earnings in the current financial year, in this case the bonus would be the relevant earnings, but could be applicable to others maybe topping up pension from savings.

Indeed.  To make it even more complex, you must fill *this* year's allowance before it spills over to the tax year three years ago.  So you must be earning at least £60k+ to be able to use previous years' allowances.  So if you earned £100k, say, you could put £60k into *this* year's pot and £40k into your previous £120k allowances from the previous three years.
This is a very generous situation, allowing you to claim tens of thousands of pounds in tax relief from HMRC - £80k.  I see this being in the line of fire of an incoming Labour government and I'd suggest if people want to do this - i.e. use previous years' allowances -  they do so promptly.

Dazed_and_C0nfused

So if you earned £100k, say, you could put £60k into *this* year's pot and £40k into your previous £120k allowances from the previous three years.

A slightly unusual way of wording it so just to be clear you can never make contributions for a previous tax year.

Unused annual allowance allows you to make additional contributions in the current tax year and any personal tax saving is relevant to the current tax year, the contributions don't impact any of the previous 3 tax years.