Pension contribution amount to stay in BR tax

HJ007

Hi. Should probably be easy to find out but I'm going round and round with google...would be grateful for real help!

This year my taxable income from  salary + pension +savings interest should come to £53400. So £3130 in excess of the £50270 threshold for HR tax.
My question is how much should I pay into my SIPP to keep me out of the HR bracket . Just getting confused as to whether the govs tax relief counts toward the overage 
Also I dont do Self Assessment so how would I let HMRC know.

Many thanks

ali_bear

It is the gross pension contribution that is subtracted from your income to arrive at the taxable amount, in your case £3130. 

If it is taken direct from your payroll before tax then that is the amount. If you pay it from your take-home pay then you would pay 80% of that and the other 20% is automatically added by the pension provider (the money coming from HMRC), you also get a tax code increase that saves you the other 20% of the tax you would have paid on that income.

HJ007

ali_bear said:

It is the gross pension contribution that is subtracted from your income to arrive at the taxable amount, in your case £3130. 

If it is taken direct from your payroll before tax then that is the amount. If you pay it from your take-home pay then you would pay 80% of that and the other 20% is automatically added by the pension provider (the money coming from HMRC), you also get a tax code increase that saves you the other 20% of the tax you would have paid on that income.

THanks, thats a bit clearer! How would I inform HMRC that I've made a contribution? Theres a form /claim-tax-relief-on-your-private-pension-payments but I'm not sure that its the correct one to use. 

ali_bear

Can't remember the details but there is a page in your personal tax account where you can tell them about pension contributions. But I think they also get notified by the pension companies, or there is some cross checking of some sort. Don't expect a super rapid response from HMRC 

DRS1

New online way to claim Pension Tax relief via Government Gateway — MoneySavingExpert Forum

May help

HJ007

DRS1 said:

(link taken out as I am a newbie)

May help

Thanks  The above form states

Who can claim

To be eligible to claim tax relief you must be:

• 1. a basic rate taxpayer that pays into a workplace pension but the employer does not or will no longer claim tax relief
• 2 .a basic rate taxpayer that pays a lump sum into a personal or workplace pension that is not under a net pay scheme
• 3. an intermediate rate tax payer or a higher rate tax payer  that pays into a personal or workplace pension

So as my lump sum  contribution was made from wages already taxed do I claim under option 2 or as I will be higher rate tax before the contribution  option 3?

DRS1

My guess is option 3 but I believe @Sarahspangles has used the form so she may know.  Do you even have to pick an option?

Sarahspangles

HJ007 said:

DRS1 said:

(link taken out as I am a newbie)

May help

Thanks  The above form states

Who can claim

To be eligible to claim tax relief you must be:

• 1. a basic rate taxpayer that pays into a workplace pension but the employer does not or will no longer claim tax relief
• 2 .a basic rate taxpayer that pays a lump sum into a personal or workplace pension that is not under a net pay scheme
• 3. an intermediate rate tax payer or a higher rate tax payer  that pays into a personal or workplace pension

So as my lump sum  contribution was made from wages already taxed do I claim under option 2 or as I will be higher rate tax before the contribution  option 3?

You’re option 3, but when I completed the form I didn’t need to select one. The form is new and may have changed but when I used it, it wasn’t very clear that you shouldn’t provide information about other pensions, they’re only interested in the one you need to claim relief on.

35 days after I submitted, they increased my tax code but it was too late to reduce the tax on my March payslip and I assume I now have to wait until P800s are sent out later in the year. You need to tell them though or you won’t get the higher rate tax refund.