Pension contribution to get me below 100k

Benny130

Thanks in advance to anyone that can help.

I want to get my earnings below 100k to avoid the 60% tax rate by adding a contribution to my pension. Is it the contribution including the 20% government rebate i need to use to calculate? 

For example. If I'm going to earn £120000. Do i need to pay £20k into the pension or 20k less the government rebate ie £16666.

I hope some one can help?

Oh and do I need totake into account interest on savings that would add to the 120k earnings??

BoGoF

Benny130 said:

Thanks in advance to anyone that can help.

I want to get my earnings below 100k to avoid the 60% tax rate by adding a contribution to my pension. Is it the contribution including the 20% government rebate i need to use to calculate? 

For example. If I'm going to earn £120000. Do i need to pay £20k into the pension or 20k less the government rebate ie £16666.

I hope some one can help?

Oh and do I need totake into account interest on savings that would add to the 120k earnings??

Yes to both - any 20% tax relief at source counts towards what you need to contribute and you need to take account of all taxable income sources.

[Deleted User]

Im confused can someone clarify?

If projected income is £101,000 say how much of a personal contribution would need to be made?

BoGoF

[Deleted User] said:

Im confused can someone clarify?

If projected income is £101,000 say how much of a personal contribution would need to be made?

If a relief at source scheme then £800 which is grossed up to £1000 with tax relief.

Dazed_and_C0nfused

Benny130 said:

Thanks in advance to anyone that can help.

I want to get my earnings below 100k to avoid the 60% tax rate by adding a contribution to my pension. Is it the contribution including the 20% government rebate i need to use to calculate? 

For example. If I'm going to earn £120000. Do i need to pay £20k into the pension or 20k less the government rebate ie £16666.

I hope some one can help?

Oh and do I need totake into account interest on savings that would add to the 120k earnings??

It will achieve what you want but making relief at source (RAS) contributions to a personal pension or SIPP doesn't reduce your taxable income.

But the contributions do reduce your adjusted net income and that is what your Personal Allowance is based on.

You have to include all taxable income when calculating your adjusted net income, even interest and dividends which might be taxed at 0%.

The gross RAS contribution is deducted when calculating your ANI.  So if you handover £5,000 the gross contribution would be £6,250 once the pension company adds the basic rate relief.

Phossy

To reduce 120K to 100K, then you will need to add 16K (the additional 4K will be added by the government)

To reduce 101 K to 100 k , you will need to pay £800

Earning over 100k? How to avoid the 60% tax trap | Saltus