Working out total contributions to a SIPP

Secret2ndAccount

Cleaver said:

Secret2ndAccount said:

If you're earning above 100k this gets highly beneficial. Firstly you can get back the extra 20% of a lot pension contribs; further to that, the contribs reduce your adjusted net income - the number that is used to taper away your personal allowance. So you can effectively benefit by 60% for some of your contribs.

Just to clarify this with an example - if you earned £150,000 via PAYE but then contributed £60,000 gross to a SIPP or private pension you're net adjusted income used to work out the tax would essentially be £90,000?

Yes                 

Dazed_and_C0nfused

Secret2ndAccount said:

Cleaver said:

Secret2ndAccount said:

If you're earning above 100k this gets highly beneficial. Firstly you can get back the extra 20% of a lot pension contribs; further to that, the contribs reduce your adjusted net income - the number that is used to taper away your personal allowance. So you can effectively benefit by 60% for some of your contribs.

Just to clarify this with an example - if you earned £150,000 via PAYE but then contributed £60,000 gross to a SIPP or private pension you're net adjusted income used to work out the tax would essentially be £90,000?

Yes                 

But only if you had no other taxable income and hadn't made any Gift Aid donations.