We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Calculating how much I can pay into extra pension to avoid paying Income tax?
Options

ISky11
Posts: 7 Forumite

in Cutting tax
Having just got my State Pension I find myself looking like I'll be paying Higher rate tax this year. I'd like to avoid paying higher tax and tbh, as I have state pension now, perhaps I can pay more into a Pension plan to avoid paying any tax.
I have a Works pension, small amount of PAYE and work Self employment. 24/25 tax year looks like I'll have an income of (say) £58,000. If my self employment earnings say £6000 and Paye £3000 what would be the most I could put into a new pension pot this tax year - can anyone help with the setting out the calculation for me pls?
TIA
I have a Works pension, small amount of PAYE and work Self employment. 24/25 tax year looks like I'll have an income of (say) £58,000. If my self employment earnings say £6000 and Paye £3000 what would be the most I could put into a new pension pot this tax year - can anyone help with the setting out the calculation for me pls?
TIA
0
Comments
-
The most you could pay, and get tax relief on, is your earned income of £9,000 but that would be the gross amount including basic rate relief which equates to a net payment by you of £7,200.
However if the objective is solely to avoid paying higher rate tax then slightly less than that would be needed. You talk of not paying any tax? Not sure what you mean by that?0 -
ISky11 said:Having just got my State Pension I find myself looking like I'll be paying Higher rate tax this year. I'd like to avoid paying higher tax and tbh, as I have state pension now, perhaps I can pay more into a Pension plan to avoid paying any tax.
I have a Works pension, small amount of PAYE and work Self employment. 24/25 tax year looks like I'll have an income of (say) £58,000. If my self employment earnings say £6000 and Paye £3000 what would be the most I could put into a new pension pot this tax year - can anyone help with the setting out the calculation for me pls?
TIA0 -
Thank you. My poor wording.
So I earn £9,000, pay in "gross" - sorry - into a pension plan and the pension Co. pay in the 20% bit and I claim back the balance for the 40% part through my Tax return?
Oh gosh, I have mangled that somewhat.0 -
Dazed_and_C0nfused said:ISky11 said:Having just got my State Pension I find myself looking like I'll be paying Higher rate tax this year. I'd like to avoid paying higher tax and tbh, as I have state pension now, perhaps I can pay more into a Pension plan to avoid paying any tax.
I have a Works pension, small amount of PAYE and work Self employment. 24/25 tax year looks like I'll have an income of (say) £58,000. If my self employment earnings say £6000 and Paye £3000 what would be the most I could put into a new pension pot this tax year - can anyone help with the setting out the calculation for me pls?
TIA0 -
ISky11 said:Dazed_and_C0nfused said:ISky11 said:Having just got my State Pension I find myself looking like I'll be paying Higher rate tax this year. I'd like to avoid paying higher tax and tbh, as I have state pension now, perhaps I can pay more into a Pension plan to avoid paying any tax.
I have a Works pension, small amount of PAYE and work Self employment. 24/25 tax year looks like I'll have an income of (say) £58,000. If my self employment earnings say £6000 and Paye £3000 what would be the most I could put into a new pension pot this tax year - can anyone help with the setting out the calculation for me pls?
TIA0 -
TheSpectator said:ISky11 said:Dazed_and_C0nfused said:ISky11 said:Having just got my State Pension I find myself looking like I'll be paying Higher rate tax this year. I'd like to avoid paying higher tax and tbh, as I have state pension now, perhaps I can pay more into a Pension plan to avoid paying any tax.
I have a Works pension, small amount of PAYE and work Self employment. 24/25 tax year looks like I'll have an income of (say) £58,000. If my self employment earnings say £6000 and Paye £3000 what would be the most I could put into a new pension pot this tax year - can anyone help with the setting out the calculation for me pls?
TIA
When you say "it" in your last response and paying some tax - I'm unsure. I think I've worded very poorly this time! I will have to pay some tax at 20% on my Pension income. I was trying to get to a position where I get the benefit of not paying any tax on my earned income or should I word that as getting a 20 0r 40% 'boost" on the pensions contributions - (i.e. my PAYE and the rest Self employed - the £9,000 I mentioned in the original post. Is that not possible? I thought I might just achieve this by putting all of my earnings into a new pension pot?
0 -
ISky11 said:TheSpectator said:ISky11 said:Dazed_and_C0nfused said:ISky11 said:Having just got my State Pension I find myself looking like I'll be paying Higher rate tax this year. I'd like to avoid paying higher tax and tbh, as I have state pension now, perhaps I can pay more into a Pension plan to avoid paying any tax.
I have a Works pension, small amount of PAYE and work Self employment. 24/25 tax year looks like I'll have an income of (say) £58,000. If my self employment earnings say £6000 and Paye £3000 what would be the most I could put into a new pension pot this tax year - can anyone help with the setting out the calculation for me pls?
TIA
When you say "it" in your last response and paying some tax - I'm unsure. I think I've worded very poorly this time! I will have to pay some tax at 20% on my Pension income. I was trying to get to a position where I get the benefit of not paying any tax on my earned income or should I word that as getting a 20 0r 40% 'boost" on the pensions contributions - (i.e. my PAYE and the rest Self employed - the £9,000 I mentioned in the original post. Is that not possible? I thought I might just achieve this by putting all of my earnings into a new pension pot?
You can then pay a net pension contribution of £8,000 and basic rate relief of £2,000 will be added to make it £10.,000. Your basic rate band will be increased by £10,000 meaning that £10,000 income is taxed at 20% instead of 40% so £2,000 instead of 40%. So that £10,000 gross contribution only cost you £6000.1 -
If your income is £58000 and the objective is to avoid higher rate tax:
You are £7730 into higher rate tax - £7730 of your income is taxed at 40%.If you put £6184 into a SIPP this will be grossed up to £7730 by the claiming back of 20% tax by the pension company. That’s your relief at 20%.You can claim the additional 20% by informing HMRC and you will be due a refund of £1546 (20% of £7730)
Obviously this presumes no other income. Perhaps also give yourself some leeway?1 -
TheSpectator said:ISky11 said:TheSpectator said:ISky11 said:Dazed_and_C0nfused said:ISky11 said:Having just got my State Pension I find myself looking like I'll be paying Higher rate tax this year. I'd like to avoid paying higher tax and tbh, as I have state pension now, perhaps I can pay more into a Pension plan to avoid paying any tax.
I have a Works pension, small amount of PAYE and work Self employment. 24/25 tax year looks like I'll have an income of (say) £58,000. If my self employment earnings say £6000 and Paye £3000 what would be the most I could put into a new pension pot this tax year - can anyone help with the setting out the calculation for me pls?
TIA
When you say "it" in your last response and paying some tax - I'm unsure. I think I've worded very poorly this time! I will have to pay some tax at 20% on my Pension income. I was trying to get to a position where I get the benefit of not paying any tax on my earned income or should I word that as getting a 20 0r 40% 'boost" on the pensions contributions - (i.e. my PAYE and the rest Self employed - the £9,000 I mentioned in the original post. Is that not possible? I thought I might just achieve this by putting all of my earnings into a new pension pot?
You can then pay a net pension contribution of £8,000 and basic rate relief of £2,000 will be added to make it £10.,000. Your basic rate band will be increased by £10,000 meaning that £10,000 income is taxed at 20% instead of 40% so £2,000 instead of 40%. So that £10,000 gross contribution only cost you £6000.1 -
Nomunnofun1 said:TheSpectator said:ISky11 said:TheSpectator said:ISky11 said:Dazed_and_C0nfused said:ISky11 said:Having just got my State Pension I find myself looking like I'll be paying Higher rate tax this year. I'd like to avoid paying higher tax and tbh, as I have state pension now, perhaps I can pay more into a Pension plan to avoid paying any tax.
I have a Works pension, small amount of PAYE and work Self employment. 24/25 tax year looks like I'll have an income of (say) £58,000. If my self employment earnings say £6000 and Paye £3000 what would be the most I could put into a new pension pot this tax year - can anyone help with the setting out the calculation for me pls?
TIA
When you say "it" in your last response and paying some tax - I'm unsure. I think I've worded very poorly this time! I will have to pay some tax at 20% on my Pension income. I was trying to get to a position where I get the benefit of not paying any tax on my earned income or should I word that as getting a 20 0r 40% 'boost" on the pensions contributions - (i.e. my PAYE and the rest Self employed - the £9,000 I mentioned in the original post. Is that not possible? I thought I might just achieve this by putting all of my earnings into a new pension pot?
You can then pay a net pension contribution of £8,000 and basic rate relief of £2,000 will be added to make it £10.,000. Your basic rate band will be increased by £10,000 meaning that £10,000 income is taxed at 20% instead of 40% so £2,000 instead of 40%. So that £10,000 gross contribution only cost you £6000.
We are also assuming not subject to Scottish rates of tax.1
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 351.1K Banking & Borrowing
- 253.2K Reduce Debt & Boost Income
- 453.7K Spending & Discounts
- 244.1K Work, Benefits & Business
- 599.1K Mortgages, Homes & Bills
- 177K Life & Family
- 257.5K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards