LGPS AVC Contribution Calculation

AlanP_2

I am trying to calculate how much my wife can contribute to her LGPS AVC pot in Feb and March 2025, the final 2 months of the tax year.

The plan is to access this early in the 25/26 tax year and we are trying to maximise what can be contributed per month whilst allowing for enough gross / taxable pay to cover Tax, NI and LGPS pension contributions in those two months.

At the end of Month 10 (Jan 25) her YTD figures will be as follows:

Taxable Pay YTD = £47737.90 (after LGPS contributions)
NIable (Gross) YTD = £52172.60
Tax Paid YTD = £8910.20

based on:

Tax Code 1159L / 1
Monthly Gross = £5247.83
Monthly Taxable Pay = £4801.76 
Monthly LGPS contribution = £446.07
Monthly NI - £272.46


I'm hoping she can contribute £4500 in both Feb and March 2025 but want to check that the residual £747.83 gross p/m will cover income tax if any is due when the Taxable Pay p/m figure is only £301.76 (Gross - LGPS & AVC contribution).

It certainly covers the Ni and LGPS at £718.53.


Will that work?

Thanks

NOTE - The AVCs are NOT paid by Salary Sacrifice so NMW isn't an issue.

AlanP_2

I saw the MSE income tax calculator referenced in another thread (first time I had heard of it) so I ran these numbers through there.

It estimates that £7343 tax would be due in the 12 month period so we should be OK to contribute the £4.5k per month and get a small tax refund via the PAYE system each month.

Silvertabby

Just to add, if prompt payment following retirement is an issue, then I would recommend that the final AVC payment is made at least one month prior to retirement, but preferably two.

The reason for this is the time it takes for the payments to be allocated to the individual AVC records, and then for the disinvestment procedure to be carried out.  Although the salary pay run is done mid month, that isn't when the AVC payments are sent to the Pru etc.  Instead, at the end of the month the payroll department create a list of all the AVC payments by NI/Name/Amount, and send this to the Pru along with a single payment for the total amount.  It can then take at least a month for the Pru to allocate the individual payment details to each AVC account.

If swift payment isn't an issue, then no problems continuing the AVC payments right to the wire - just be aware that there could then be a 3 month gap between last day of service and payment of the tax free lump sum/pension. 

AlanP_2

It's SL as opposed to the Pru but appreciate the point.

SL seen to credit to her account around 5th / 6th of the following month so pretty quick.