Tax code and employee pension contributions

marky_b_2

Looking for some advice, living in Scotland.

If you earn £45000 and pay £2452 per year into the Civil service pension scheme.

Do you pay higher tax 42% for any earnings over £43,663 or does paying into the pension give you tax relief in that the taxable income would be £45,000 - £2452 = £42,548 so you would still be under the 42%?

Thanks

Marcon

marky_b_2 said:

Looking for some advice, living in Scotland.

If you earn £45000 and pay £2452 per year into the Civil service pension scheme.

Do you pay higher tax 42% for any earnings over £43,663 or does paying into the pension give you tax relief in that the taxable income would be £45,000 - £2452 = £42,548 so you would still be under the 42%?

Thanks

Assuming you are in a CS DB scheme (as opposed to Partnership), then your contribution is deducted from your pay before your pay is taxed (somewhat confusingly called the net pay method), so you automatically get tax relief at your marginal rate, effectively reducing your taxable pay.

marky_b_2

Thanks Marcon, I'm sure I had read that on a thread in here before but I couldn't find it in a search.

Yeah Alpha 

Cheers