£100k threshold and non salary sacrificed AVCs

Glittering_Feeling

I recognise this is a frequently asked question but I have confused myself with responses to other users.

This tax year I will be over £100k as a result of bonuses and savings interest - my estimate is it will be about £110k taking into account what has been salary sacrificed into my pension already. 

I have a 3 day window to request my company to put some of my bonus into my DC pension as an AVC.  This will not be on a salary sacrifice basis. 

My understanding is I can get 20% tax relief on this? Or is it 40%? So that in conjunction with losing less of my personal allowance would mean I’m saving on tax, is that right?

I’m a little hesitant as I already have a healthy pension pot (27.5% total contributions from me and company and value of £200k and I’m in my early 30s). But I accidentally fell into the 100k/60% tax trap last year so trying to weigh
up the best options. 

Thank you in advance

Dazed_and_C0nfused

Glittering_Feeling said:

I recognise this is a frequently asked question but I have confused myself with responses to other users.

This tax year I will be over £100k as a result of bonuses and savings interest - my estimate is it will be about £110k taking into account what has been salary sacrificed into my pension already. 

I have a 3 day window to request my company to put some of my bonus into my DC pension as an AVC.  This will not be on a salary sacrifice basis. 

My understanding is I can get 20% tax relief on this? Or is it 40%? So that in conjunction with losing less of my personal allowance would mean I’m saving on tax, is that right?

I’m a little hesitant as I already have a healthy pension pot (27.5% total contributions from me and company and value of £200k and I’m in my early 30s). But I accidentally fell into the 100k/60% tax trap last year so trying to weigh
up the best options. 

Thank you in advance

It's actually 60% that is possible where tapered Personal Allowance is involved.

Which of the other methods is used for the bonus, relief at source or net pay?

Relief at source is where you pay a net amount and the pension company adds the basic rate relief.

Net pay works more like salary sacrifice but there is no NI savings.

Glittering_Feeling

Dazed_and_C0nfused said:

Glittering_Feeling said:

I recognise this is a frequently asked question but I have confused myself with responses to other users.

This tax year I will be over £100k as a result of bonuses and savings interest - my estimate is it will be about £110k taking into account what has been salary sacrificed into my pension already. 

I have a 3 day window to request my company to put some of my bonus into my DC pension as an AVC.  This will not be on a salary sacrifice basis. 

My understanding is I can get 20% tax relief on this? Or is it 40%? So that in conjunction with losing less of my personal allowance would mean I’m saving on tax, is that right?

I’m a little hesitant as I already have a healthy pension pot (27.5% total contributions from me and company and value of £200k and I’m in my early 30s). But I accidentally fell into the 100k/60% tax trap last year so trying to weigh
up the best options. 

Thank you in advance

It's actually 60% that is possible where tapered Personal Allowance is involved.

Which of the other methods is used for the bonus, relief at source or net pay?

Relief at source is where you pay a net amount and the pension company adds the basic rate relief.

Net pay works more like salary sacrifice but there is no NI savings.

I can’t find anywhere on our HR site or the pension plan providers site what the method is. Under tax information for the one-off AVC it just says “you get income tax relief on One-Off AVCs, subject to HMRC limits. You pay National Insurance Contributions on your full gross pay (I.e. before the payment of contributions”

Does that mean net pay?  

QrizB

Glittering_Feeling said:

I have a 3 day window to request my company to put some of my bonus into my DC pension as an AVC.  This will not be on a salary sacrifice basis.

If this doesn't work out, you've got two months to make a payment into a SIPP. You can set one up and pay into it the same day, but don't wait to the start of April to do it in case there are hiccups.