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Pension contributions and tax band

rallycurve · 2024-03-02 12:30:50

Hi, excuse my ignorance on this topic as this might be a basic question but I want to confirm if I am getting it right. It is about pension contributions and how they can affect tax bands. Say you earn over £50270 and therefore you are a higher-rate taxpayer. And you contribute to a workplace pension through your salary.…

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MetaPhysical Posts: 576 Forumite

6 March 2024 at 10:34PM edited 6 March 2024 at 10:38PM

I think I am the other poster than Dazed and confused is referring to. The way I understand it is that making the large pension contribution doesn't reduce your taxable earnings per se but it expands the basic rate band by the contribution you are adding to your pension, which has the net effect of making your 40% band that much higher and also restores proportionally your personal allowance.

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