How much to put in pension to reduce tax

[Deleted User]

I’m trying to work out how much I would need to pay into my PAYE workplace pension in order to come under the higher rate tax band. I have been very fortunate to inherit some money recently which is in savings accounts for now (earmarked to buy a house), and is generating a lot of interest, but also means I am paying a lot of tax on it so I’d like to try and reduce this. My ISA and premium bonds are already maxed out and I’ll be putting another £20k in my ISA in April.

I earn £63,800 (PAYE). I have estimated that I will earn £6,000 in interest from my taxable savings in the 2025-26 tax year. I also earn about £1,800 from freelance work.

I have worked out that I would need to put 30% of my pre-tax income into my pension to reduce my income to under £50k. Does this sound about right and is there anything I've missed?

Dazed_and_C0nfused

[Deleted User] said:

I’m trying to work out how much I would need to pay into my PAYE workplace pension in order to come under the higher rate tax band. I have been very fortunate to inherit some money recently which is in savings accounts for now (earmarked to buy a house), and is generating a lot of interest, but also means I am paying a lot of tax on it so I’d like to try and reduce this. My ISA and premium bonds are already maxed out and I’ll be putting another £20k in my ISA in April.

I earn £63,800 (PAYE). I have estimated that I will earn £6,000 in interest from my taxable savings in the 2025-26 tax year. I also earn about £1,800 from freelance work.

I have worked out that I would need to put 30% of my pre-tax income into my pension to reduce my income to under £50k. Does this sound about right and is there anything I've missed?

Where do existing pension contributions fit in?

When you say earn £1,800, is that your turnover or profit?

Is £63,800 what you expect to see on your P60?

How do intend to get this money into your pension?  Only certain methods reduce your income.  The alternative results in pretty much the same outcome but you would still have £70k+ taxable income and would have to deal with HMRC.

The usual methods are,
Relief at source
Net pay
Salary sacrifice 

[Deleted User]

Dazed_and_C0nfused said:

[Deleted User] said:

I’m trying to work out how much I would need to pay into my PAYE workplace pension in order to come under the higher rate tax band. I have been very fortunate to inherit some money recently which is in savings accounts for now (earmarked to buy a house), and is generating a lot of interest, but also means I am paying a lot of tax on it so I’d like to try and reduce this. My ISA and premium bonds are already maxed out and I’ll be putting another £20k in my ISA in April.

I earn £63,800 (PAYE). I have estimated that I will earn £6,000 in interest from my taxable savings in the 2025-26 tax year. I also earn about £1,800 from freelance work.

I have worked out that I would need to put 30% of my pre-tax income into my pension to reduce my income to under £50k. Does this sound about right and is there anything I've missed?

Where do existing pension contributions fit in?

When you say earn £1,800, is that your turnover or profit?

Is £63,800 what you expect to see on your P60?

How do intend to get this money into your pension?  Only certain methods reduce your income.  The alternative results in pretty much the same outcome but you would still have £70k+ taxable income and would have to deal with HMRC.

The usual methods are,
Relief at source
Net pay
Salary sacrifice 

Thanks for replying.

At the moment I put 13% into my pension.

The £1,800 from freelance work is turnover.

And yes - £63,800 would be what I'd expect to see on my payslip.

I assumed I'd be able to increase my pension contributions to 30% from April to come under £50kish taxable income?

Dazed_and_C0nfused

[Deleted User] said:

Dazed_and_C0nfused said:

[Deleted User] said:

I’m trying to work out how much I would need to pay into my PAYE workplace pension in order to come under the higher rate tax band. I have been very fortunate to inherit some money recently which is in savings accounts for now (earmarked to buy a house), and is generating a lot of interest, but also means I am paying a lot of tax on it so I’d like to try and reduce this. My ISA and premium bonds are already maxed out and I’ll be putting another £20k in my ISA in April.

I earn £63,800 (PAYE). I have estimated that I will earn £6,000 in interest from my taxable savings in the 2025-26 tax year. I also earn about £1,800 from freelance work.

I have worked out that I would need to put 30% of my pre-tax income into my pension to reduce my income to under £50k. Does this sound about right and is there anything I've missed?

Where do existing pension contributions fit in?

When you say earn £1,800, is that your turnover or profit?

Is £63,800 what you expect to see on your P60?

How do intend to get this money into your pension?  Only certain methods reduce your income.  The alternative results in pretty much the same outcome but you would still have £70k+ taxable income and would have to deal with HMRC.

The usual methods are,
Relief at source
Net pay
Salary sacrifice 

Thanks for replying.

At the moment I put 13% into my pension.

The £1,800 from freelance work is turnover.

And yes - £63,800 would be what I'd expect to see on my payslip.

I assumed I'd be able to increase my pension contributions to 30% from April to come under £50kish taxable income?

Your turnover is of no relevance to this.  What will your taxable profit be?

Until you say which method you will be using to get the money into your pension it's impossible to say what your taxable income would be.

I don't understand your 30% comment though.

If your current earnings (from employment) are ~£73k and you now pay 13%,'which reduces your taxable earnings to £63,800 then increasing your pension contributions to 30%, presumably using the same method, would mean your earnings alone were still above the basic rate threshold (~£51k).

[Deleted User]

Dazed_and_C0nfused said:

[Deleted User] said:

Dazed_and_C0nfused said:

[Deleted User] said:

I’m trying to work out how much I would need to pay into my PAYE workplace pension in order to come under the higher rate tax band. I have been very fortunate to inherit some money recently which is in savings accounts for now (earmarked to buy a house), and is generating a lot of interest, but also means I am paying a lot of tax on it so I’d like to try and reduce this. My ISA and premium bonds are already maxed out and I’ll be putting another £20k in my ISA in April.

I earn £63,800 (PAYE). I have estimated that I will earn £6,000 in interest from my taxable savings in the 2025-26 tax year. I also earn about £1,800 from freelance work.

I have worked out that I would need to put 30% of my pre-tax income into my pension to reduce my income to under £50k. Does this sound about right and is there anything I've missed?

Where do existing pension contributions fit in?

When you say earn £1,800, is that your turnover or profit?

Is £63,800 what you expect to see on your P60?

How do intend to get this money into your pension?  Only certain methods reduce your income.  The alternative results in pretty much the same outcome but you would still have £70k+ taxable income and would have to deal with HMRC.

The usual methods are,
Relief at source
Net pay
Salary sacrifice 

Thanks for replying.

At the moment I put 13% into my pension.

The £1,800 from freelance work is turnover.

And yes - £63,800 would be what I'd expect to see on my payslip.

I assumed I'd be able to increase my pension contributions to 30% from April to come under £50kish taxable income?

Your turnover is of no relevance to this.  What will your taxable profit be?

Until you say which method you will be using to get the money into your pension it's impossible to say what your taxable income would be.

I don't understand your 30% comment though.

If your current earnings (from employment) are ~£73k and you now pay 13%,'which reduces your taxable earnings to £63,800 then increasing your pension contributions to 30%, presumably using the same method, would mean your earnings alone were still above the basic rate threshold (~£51k).

Profit is £1,400.

At the moment I pay into my pension via PAYE. I only have a workplace pension. I would aim to continue to pay in in this way.