extra payments towards private pension to avoid 40% tax

kokolino23

Hello,

Due to the nature of my job, I work overtime and my income is over £50,270 annualy, most probably between £5k to £10k.

Can I pay extra towards my private pension so I can save paying 40% tax on the amount exceeding the 20% basic rate tax threshold?

As far as I'm aware, I'm allowed that but I'm not sure what's the best way for me to do it?

If I'll leave it until Feb-March when I know what my annual income will be, I have to dip into my savings.

I'm not sure what's the best option for me? Pay a monthly amount (let's say £500/month) and hope that at the end of financial year my income won't go over £50k? What's the best way to calculate this?

I have to fill in a self assessment tax return so once I'll do that, the HMRC will refund the tax?

Thank you

Dazed_and_C0nfused

kokolino23 said:

Hello,

Due to the nature of my job, I work overtime and my income is over £50,270 annualy, most probably between £5k to £10k.

Can I pay extra towards my private pension so I can save paying 40% tax on the amount exceeding the 20% basic rate tax threshold?

As far as I'm aware, I'm allowed that but I'm not sure what's the best way for me to do it?

If I'll leave it until Feb-March when I know what my annual income will be, I have to dip into my savings.

I'm not sure what's the best option for me? Pay a monthly amount (let's say £500/month) and hope that at the end of financial year my income won't go over £50k? What's the best way to calculate this?

I have to fill in a self assessment tax return so once I'll do that, the HMRC will refund the tax?

Thank you

You can save tax in this situation but what method will you be using to make these extra contributions?

Net pay
Relief at source 
Salary sacrifice 

kokolino23

I don't know the difference between them.

JoeCrystal

Here is an easy to read guide on what these terms mean for you:

https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/tax-relief-and-your-pension