2024 pension lump sum

Karen1980_Lily

Dazed_and_C0nfused said:

Karen1980_Lily said:

Dazed_and_C0nfused said:

Karen1980_Lily said:

[Deleted User] said:

Karen1980_Lily said:

TheSpectator said:

penners324 said:

Your DC pension will add 25%.

There's no extra to claim back. You're very close but below the 40% threshold on your salary plus interest anyway. Even if you go over the threshold it's a very small amount you could claim

Not so sure on being below the threshold - on taxable pay of £49k + £3k interest there will be a HR liability of £1,230 @ 40%.

I'm just trying to work out how much to lump sum into a pension to get my tax return back to a 20% payer so I can have the interest allowance of £1000 instead of £500

OK - if your total taxable income is £52000 and you have made no contributions into your personal pension this year you need to make a contribution of £1730 gross. That is a payment by you of £1384 which is grossed up to £1730. 

You must then inform HMRC to obtain additional relief of £346, 20% of £1730. 

But give yourself some leeway!

I have paid into my pension this year through salary sacrifice but I haven't paid any lump sums and I am below the 60K threshold.
I thought I needed to pay 10k meaning that if get the relief of between 2 and 4k?

Why £10k?

The higher rate threshold is £50,270.

Personal Allowance £12,570
Basic rate band £37,700

I thought it was only the relief that will come off of my threshold not the actual amount I pay into my pension? 
52 k total earnings
10k in pension which is 2k relief 
back down to 50k?
I must admit I found an online calculator that suggested this approach was wrong.

That is pretty much all wrong.

If you pay £10k then you would get £2,500 in pension tax relief.  Making a gross contribution of £12,500.  Pension tax relief is 20%, not 16.67%.

And that contribution would make no difference whatsoever to your taxable income.  That would remain £52k, £53k whatever figure you want to use.

But your basic rate band would be increased from £37,700 to £50,200.

Adding £12.5k (gross) to a pension is rarely a bad thing but it seems to bear no relation to what you are wanting to acheive.

In trying to increase my basic 20% tax band to make the 52k 20% tax. Thus allowing me to keep my 1k interest allowance and any amount over to 20% tax

Dazed_and_C0nfused

Karen1980_Lily said:

Dazed_and_C0nfused said:

Karen1980_Lily said:

Dazed_and_C0nfused said:

Karen1980_Lily said:

[Deleted User] said:

Karen1980_Lily said:

TheSpectator said:

penners324 said:

Your DC pension will add 25%.

There's no extra to claim back. You're very close but below the 40% threshold on your salary plus interest anyway. Even if you go over the threshold it's a very small amount you could claim

Not so sure on being below the threshold - on taxable pay of £49k + £3k interest there will be a HR liability of £1,230 @ 40%.

I'm just trying to work out how much to lump sum into a pension to get my tax return back to a 20% payer so I can have the interest allowance of £1000 instead of £500

OK - if your total taxable income is £52000 and you have made no contributions into your personal pension this year you need to make a contribution of £1730 gross. That is a payment by you of £1384 which is grossed up to £1730. 

You must then inform HMRC to obtain additional relief of £346, 20% of £1730. 

But give yourself some leeway!

I have paid into my pension this year through salary sacrifice but I haven't paid any lump sums and I am below the 60K threshold.
I thought I needed to pay 10k meaning that if get the relief of between 2 and 4k?

Why £10k?

The higher rate threshold is £50,270.

Personal Allowance £12,570
Basic rate band £37,700

I thought it was only the relief that will come off of my threshold not the actual amount I pay into my pension? 
52 k total earnings
10k in pension which is 2k relief 
back down to 50k?
I must admit I found an online calculator that suggested this approach was wrong.

That is pretty much all wrong.

If you pay £10k then you would get £2,500 in pension tax relief.  Making a gross contribution of £12,500.  Pension tax relief is 20%, not 16.67%.

And that contribution would make no difference whatsoever to your taxable income.  That would remain £52k, £53k whatever figure you want to use.

But your basic rate band would be increased from £37,700 to £50,200.

Adding £12.5k (gross) to a pension is rarely a bad thing but it seems to bear no relation to what you are wanting to acheive.

In trying to increase my basic 20% tax band to make the 52k 20% tax. Thus allowing me to keep my 1k interest allowance and any amount over to 20% tax

So where does contributing £12.5k (gross) come into play then?

[Deleted User]

Karen1980_Lily said:

Dazed_and_C0nfused said:

Karen1980_Lily said:

Dazed_and_C0nfused said:

Karen1980_Lily said:

[Deleted User] said:

Karen1980_Lily said:

TheSpectator said:

penners324 said:

Your DC pension will add 25%.

There's no extra to claim back. You're very close but below the 40% threshold on your salary plus interest anyway. Even if you go over the threshold it's a very small amount you could claim

Not so sure on being below the threshold - on taxable pay of £49k + £3k interest there will be a HR liability of £1,230 @ 40%.

I'm just trying to work out how much to lump sum into a pension to get my tax return back to a 20% payer so I can have the interest allowance of £1000 instead of £500

OK - if your total taxable income is £52000 and you have made no contributions into your personal pension this year you need to make a contribution of £1730 gross. That is a payment by you of £1384 which is grossed up to £1730. 

You must then inform HMRC to obtain additional relief of £346, 20% of £1730. 

But give yourself some leeway!

I have paid into my pension this year through salary sacrifice but I haven't paid any lump sums and I am below the 60K threshold.
I thought I needed to pay 10k meaning that if get the relief of between 2 and 4k?

Why £10k?

The higher rate threshold is £50,270.

Personal Allowance £12,570
Basic rate band £37,700

I thought it was only the relief that will come off of my threshold not the actual amount I pay into my pension? 
52 k total earnings
10k in pension which is 2k relief 
back down to 50k?
I must admit I found an online calculator that suggested this approach was wrong.

That is pretty much all wrong.

If you pay £10k then you would get £2,500 in pension tax relief.  Making a gross contribution of £12,500.  Pension tax relief is 20%, not 16.67%.

And that contribution would make no difference whatsoever to your taxable income.  That would remain £52k, £53k whatever figure you want to use.

But your basic rate band would be increased from £37,700 to £50,200.

Adding £12.5k (gross) to a pension is rarely a bad thing but it seems to bear no relation to what you are wanting to acheive.

In trying to increase my basic 20% tax band to make the 52k 20% tax. Thus allowing me to keep my 1k interest allowance and any amount over to 20% tax

In that instance I informed you exactly what was required on my earlier post. 

I think that I now understand your confusion. You believe that you have to claim relief of £2500 in order to bring your taxable income below £50000. (£12500 minus £10000). Am I correct?

This is incorrect. You only need to pay £1384 which will be grossed up to £1730. See my earlier post. If you do that (maybe a bit more to be safe) you will not pay 40% tax on any income, 

Karen1980_Lily

[Deleted User] said:

Karen1980_Lily said:

Dazed_and_C0nfused said:

Karen1980_Lily said:

Dazed_and_C0nfused said:

Karen1980_Lily said:

[Deleted User] said:

Karen1980_Lily said:

TheSpectator said:

penners324 said:

Your DC pension will add 25%.

There's no extra to claim back. You're very close but below the 40% threshold on your salary plus interest anyway. Even if you go over the threshold it's a very small amount you could claim

Not so sure on being below the threshold - on taxable pay of £49k + £3k interest there will be a HR liability of £1,230 @ 40%.

I'm just trying to work out how much to lump sum into a pension to get my tax return back to a 20% payer so I can have the interest allowance of £1000 instead of £500

OK - if your total taxable income is £52000 and you have made no contributions into your personal pension this year you need to make a contribution of £1730 gross. That is a payment by you of £1384 which is grossed up to £1730. 

You must then inform HMRC to obtain additional relief of £346, 20% of £1730. 

But give yourself some leeway!

I have paid into my pension this year through salary sacrifice but I haven't paid any lump sums and I am below the 60K threshold.
I thought I needed to pay 10k meaning that if get the relief of between 2 and 4k?

Why £10k?

The higher rate threshold is £50,270.

Personal Allowance £12,570
Basic rate band £37,700

I thought it was only the relief that will come off of my threshold not the actual amount I pay into my pension? 
52 k total earnings
10k in pension which is 2k relief 
back down to 50k?
I must admit I found an online calculator that suggested this approach was wrong.

That is pretty much all wrong.

If you pay £10k then you would get £2,500 in pension tax relief.  Making a gross contribution of £12,500.  Pension tax relief is 20%, not 16.67%.

And that contribution would make no difference whatsoever to your taxable income.  That would remain £52k, £53k whatever figure you want to use.

But your basic rate band would be increased from £37,700 to £50,200.

Adding £12.5k (gross) to a pension is rarely a bad thing but it seems to bear no relation to what you are wanting to acheive.

In trying to increase my basic 20% tax band to make the 52k 20% tax. Thus allowing me to keep my 1k interest allowance and any amount over to 20% tax

In that instance I informed you exactly what was required on my earlier post. 

I think that I now understand your confusion. You believe that you have to claim relief of £2500 in order to bring your taxable income below £50000. (£12500 minus £10000). Am I correct?

This is incorrect. You only need to pay £1384 which will be grossed up to £1730. See my earlier post. If you do that (maybe a bit more to be safe) you will not pay 40% tax on any income, 

Yes that is correct. I thought I had to claim reliwf of 2500 to get under  hence the idea of such a large sum to get the 2500 relief.

Karen1980_Lily

Dazed_and_C0nfused said:

Karen1980_Lily said:

Dazed_and_C0nfused said:

Karen1980_Lily said:

Dazed_and_C0nfused said:

Karen1980_Lily said:

[Deleted User] said:

Karen1980_Lily said:

TheSpectator said:

penners324 said:

Your DC pension will add 25%.

There's no extra to claim back. You're very close but below the 40% threshold on your salary plus interest anyway. Even if you go over the threshold it's a very small amount you could claim

Not so sure on being below the threshold - on taxable pay of £49k + £3k interest there will be a HR liability of £1,230 @ 40%.

I'm just trying to work out how much to lump sum into a pension to get my tax return back to a 20% payer so I can have the interest allowance of £1000 instead of £500

OK - if your total taxable income is £52000 and you have made no contributions into your personal pension this year you need to make a contribution of £1730 gross. That is a payment by you of £1384 which is grossed up to £1730. 

You must then inform HMRC to obtain additional relief of £346, 20% of £1730. 

But give yourself some leeway!

I have paid into my pension this year through salary sacrifice but I haven't paid any lump sums and I am below the 60K threshold.
I thought I needed to pay 10k meaning that if get the relief of between 2 and 4k?

Why £10k?

The higher rate threshold is £50,270.

Personal Allowance £12,570
Basic rate band £37,700

I thought it was only the relief that will come off of my threshold not the actual amount I pay into my pension? 
52 k total earnings
10k in pension which is 2k relief 
back down to 50k?
I must admit I found an online calculator that suggested this approach was wrong.

That is pretty much all wrong.

If you pay £10k then you would get £2,500 in pension tax relief.  Making a gross contribution of £12,500.  Pension tax relief is 20%, not 16.67%.

And that contribution would make no difference whatsoever to your taxable income.  That would remain £52k, £53k whatever figure you want to use.

But your basic rate band would be increased from £37,700 to £50,200.

Adding £12.5k (gross) to a pension is rarely a bad thing but it seems to bear no relation to what you are wanting to acheive.

In trying to increase my basic 20% tax band to make the 52k 20% tax. Thus allowing me to keep my 1k interest allowance and any amount over to 20% tax

So where does contributing £12.5k (gross) come into play then?

I think someone below has explained it better.
I thought I had to use only the relief to get me under 50k. Hence 12500 -10000 = 2500 relief. It seems this is not true.

[Deleted User]

Karen1980_Lily said:

[Deleted User] said:

Karen1980_Lily said:

Dazed_and_C0nfused said:

Karen1980_Lily said:

Dazed_and_C0nfused said:

Karen1980_Lily said:

[Deleted User] said:

Karen1980_Lily said:

TheSpectator said:

penners324 said:

Your DC pension will add 25%.

There's no extra to claim back. You're very close but below the 40% threshold on your salary plus interest anyway. Even if you go over the threshold it's a very small amount you could claim

Not so sure on being below the threshold - on taxable pay of £49k + £3k interest there will be a HR liability of £1,230 @ 40%.

I'm just trying to work out how much to lump sum into a pension to get my tax return back to a 20% payer so I can have the interest allowance of £1000 instead of £500

OK - if your total taxable income is £52000 and you have made no contributions into your personal pension this year you need to make a contribution of £1730 gross. That is a payment by you of £1384 which is grossed up to £1730. 

You must then inform HMRC to obtain additional relief of £346, 20% of £1730. 

But give yourself some leeway!

I have paid into my pension this year through salary sacrifice but I haven't paid any lump sums and I am below the 60K threshold.
I thought I needed to pay 10k meaning that if get the relief of between 2 and 4k?

Why £10k?

The higher rate threshold is £50,270.

Personal Allowance £12,570
Basic rate band £37,700

I thought it was only the relief that will come off of my threshold not the actual amount I pay into my pension? 
52 k total earnings
10k in pension which is 2k relief 
back down to 50k?
I must admit I found an online calculator that suggested this approach was wrong.

That is pretty much all wrong.

If you pay £10k then you would get £2,500 in pension tax relief.  Making a gross contribution of £12,500.  Pension tax relief is 20%, not 16.67%.

And that contribution would make no difference whatsoever to your taxable income.  That would remain £52k, £53k whatever figure you want to use.

But your basic rate band would be increased from £37,700 to £50,200.

Adding £12.5k (gross) to a pension is rarely a bad thing but it seems to bear no relation to what you are wanting to acheive.

In trying to increase my basic 20% tax band to make the 52k 20% tax. Thus allowing me to keep my 1k interest allowance and any amount over to 20% tax

In that instance I informed you exactly what was required on my earlier post. 

I think that I now understand your confusion. You believe that you have to claim relief of £2500 in order to bring your taxable income below £50000. (£12500 minus £10000). Am I correct?

This is incorrect. You only need to pay £1384 which will be grossed up to £1730. See my earlier post. If you do that (maybe a bit more to be safe) you will not pay 40% tax on any income, 

Yes that is correct. I thought I had to claim reliwf of 2500 to get under  hence the idea of such a large sum to get the 2500 relief.

Thought so - no need for anywhere near that amount. You’ve two more days to make a net contribution of at least £1384 if the £52000 is correct. 

Karen1980_Lily

[Deleted User] said:

Karen1980_Lily said:

[Deleted User] said:

Karen1980_Lily said:

Dazed_and_C0nfused said:

Karen1980_Lily said:

Dazed_and_C0nfused said:

Karen1980_Lily said:

[Deleted User] said:

Karen1980_Lily said:

TheSpectator said:

penners324 said:

Your DC pension will add 25%.

There's no extra to claim back. You're very close but below the 40% threshold on your salary plus interest anyway. Even if you go over the threshold it's a very small amount you could claim

Not so sure on being below the threshold - on taxable pay of £49k + £3k interest there will be a HR liability of £1,230 @ 40%.

I'm just trying to work out how much to lump sum into a pension to get my tax return back to a 20% payer so I can have the interest allowance of £1000 instead of £500

OK - if your total taxable income is £52000 and you have made no contributions into your personal pension this year you need to make a contribution of £1730 gross. That is a payment by you of £1384 which is grossed up to £1730. 

You must then inform HMRC to obtain additional relief of £346, 20% of £1730. 

But give yourself some leeway!

I have paid into my pension this year through salary sacrifice but I haven't paid any lump sums and I am below the 60K threshold.
I thought I needed to pay 10k meaning that if get the relief of between 2 and 4k?

Why £10k?

The higher rate threshold is £50,270.

Personal Allowance £12,570
Basic rate band £37,700

I thought it was only the relief that will come off of my threshold not the actual amount I pay into my pension? 
52 k total earnings
10k in pension which is 2k relief 
back down to 50k?
I must admit I found an online calculator that suggested this approach was wrong.

That is pretty much all wrong.

If you pay £10k then you would get £2,500 in pension tax relief.  Making a gross contribution of £12,500.  Pension tax relief is 20%, not 16.67%.

And that contribution would make no difference whatsoever to your taxable income.  That would remain £52k, £53k whatever figure you want to use.

But your basic rate band would be increased from £37,700 to £50,200.

Adding £12.5k (gross) to a pension is rarely a bad thing but it seems to bear no relation to what you are wanting to acheive.

In trying to increase my basic 20% tax band to make the 52k 20% tax. Thus allowing me to keep my 1k interest allowance and any amount over to 20% tax

In that instance I informed you exactly what was required on my earlier post. 

I think that I now understand your confusion. You believe that you have to claim relief of £2500 in order to bring your taxable income below £50000. (£12500 minus £10000). Am I correct?

This is incorrect. You only need to pay £1384 which will be grossed up to £1730. See my earlier post. If you do that (maybe a bit more to be safe) you will not pay 40% tax on any income, 

Yes that is correct. I thought I had to claim reliwf of 2500 to get under  hence the idea of such a large sum to get the 2500 relief.

Thought so - no need for anywhere near that amount. You’ve two more days to make a net contribution of at least £1384 if the £52000 is correct. 

So basically the whole lump sum from my bank account will reduce my taxable income?

[Deleted User]

Karen1980_Lily said:

[Deleted User] said:

Karen1980_Lily said:

[Deleted User] said:

Karen1980_Lily said:

Dazed_and_C0nfused said:

Karen1980_Lily said:

Dazed_and_C0nfused said:

Karen1980_Lily said:

[Deleted User] said:

Karen1980_Lily said:

TheSpectator said:

penners324 said:

Your DC pension will add 25%.

There's no extra to claim back. You're very close but below the 40% threshold on your salary plus interest anyway. Even if you go over the threshold it's a very small amount you could claim

Not so sure on being below the threshold - on taxable pay of £49k + £3k interest there will be a HR liability of £1,230 @ 40%.

I'm just trying to work out how much to lump sum into a pension to get my tax return back to a 20% payer so I can have the interest allowance of £1000 instead of £500

OK - if your total taxable income is £52000 and you have made no contributions into your personal pension this year you need to make a contribution of £1730 gross. That is a payment by you of £1384 which is grossed up to £1730. 

You must then inform HMRC to obtain additional relief of £346, 20% of £1730. 

But give yourself some leeway!

I have paid into my pension this year through salary sacrifice but I haven't paid any lump sums and I am below the 60K threshold.
I thought I needed to pay 10k meaning that if get the relief of between 2 and 4k?

Why £10k?

The higher rate threshold is £50,270.

Personal Allowance £12,570
Basic rate band £37,700

I thought it was only the relief that will come off of my threshold not the actual amount I pay into my pension? 
52 k total earnings
10k in pension which is 2k relief 
back down to 50k?
I must admit I found an online calculator that suggested this approach was wrong.

That is pretty much all wrong.

If you pay £10k then you would get £2,500 in pension tax relief.  Making a gross contribution of £12,500.  Pension tax relief is 20%, not 16.67%.

And that contribution would make no difference whatsoever to your taxable income.  That would remain £52k, £53k whatever figure you want to use.

But your basic rate band would be increased from £37,700 to £50,200.

Adding £12.5k (gross) to a pension is rarely a bad thing but it seems to bear no relation to what you are wanting to acheive.

In trying to increase my basic 20% tax band to make the 52k 20% tax. Thus allowing me to keep my 1k interest allowance and any amount over to 20% tax

In that instance I informed you exactly what was required on my earlier post. 

I think that I now understand your confusion. You believe that you have to claim relief of £2500 in order to bring your taxable income below £50000. (£12500 minus £10000). Am I correct?

This is incorrect. You only need to pay £1384 which will be grossed up to £1730. See my earlier post. If you do that (maybe a bit more to be safe) you will not pay 40% tax on any income, 

Yes that is correct. I thought I had to claim reliwf of 2500 to get under  hence the idea of such a large sum to get the 2500 relief.

Thought so - no need for anywhere near that amount. You’ve two more days to make a net contribution of at least £1384 if the £52000 is correct. 

So basically the whole lump sum from my bank account will reduce my taxable income?

It doesn’t reduce your taxable income - it would remain at £52000 regardless of how much you contributed. 

However, none of it would be chargeable at 40% - you will be a basic rate taxpayer. 

Karen1980_Lily

[Deleted User] said:

Karen1980_Lily said:

[Deleted User] said:

Karen1980_Lily said:

[Deleted User] said:

Karen1980_Lily said:

Dazed_and_C0nfused said:

Karen1980_Lily said:

Dazed_and_C0nfused said:

Karen1980_Lily said:

[Deleted User] said:

Karen1980_Lily said:

TheSpectator said:

penners324 said:

Your DC pension will add 25%.

There's no extra to claim back. You're very close but below the 40% threshold on your salary plus interest anyway. Even if you go over the threshold it's a very small amount you could claim

Not so sure on being below the threshold - on taxable pay of £49k + £3k interest there will be a HR liability of £1,230 @ 40%.

I'm just trying to work out how much to lump sum into a pension to get my tax return back to a 20% payer so I can have the interest allowance of £1000 instead of £500

OK - if your total taxable income is £52000 and you have made no contributions into your personal pension this year you need to make a contribution of £1730 gross. That is a payment by you of £1384 which is grossed up to £1730. 

You must then inform HMRC to obtain additional relief of £346, 20% of £1730. 

But give yourself some leeway!

I have paid into my pension this year through salary sacrifice but I haven't paid any lump sums and I am below the 60K threshold.
I thought I needed to pay 10k meaning that if get the relief of between 2 and 4k?

Why £10k?

The higher rate threshold is £50,270.

Personal Allowance £12,570
Basic rate band £37,700

I thought it was only the relief that will come off of my threshold not the actual amount I pay into my pension? 
52 k total earnings
10k in pension which is 2k relief 
back down to 50k?
I must admit I found an online calculator that suggested this approach was wrong.

That is pretty much all wrong.

If you pay £10k then you would get £2,500 in pension tax relief.  Making a gross contribution of £12,500.  Pension tax relief is 20%, not 16.67%.

And that contribution would make no difference whatsoever to your taxable income.  That would remain £52k, £53k whatever figure you want to use.

But your basic rate band would be increased from £37,700 to £50,200.

Adding £12.5k (gross) to a pension is rarely a bad thing but it seems to bear no relation to what you are wanting to acheive.

In trying to increase my basic 20% tax band to make the 52k 20% tax. Thus allowing me to keep my 1k interest allowance and any amount over to 20% tax

In that instance I informed you exactly what was required on my earlier post. 

I think that I now understand your confusion. You believe that you have to claim relief of £2500 in order to bring your taxable income below £50000. (£12500 minus £10000). Am I correct?

This is incorrect. You only need to pay £1384 which will be grossed up to £1730. See my earlier post. If you do that (maybe a bit more to be safe) you will not pay 40% tax on any income, 

Yes that is correct. I thought I had to claim reliwf of 2500 to get under  hence the idea of such a large sum to get the 2500 relief.

Thought so - no need for anywhere near that amount. You’ve two more days to make a net contribution of at least £1384 if the £52000 is correct. 

So basically the whole lump sum from my bank account will reduce my taxable income?

It doesn’t reduce your taxable income - it would remain at £52000 regardless of how much you contributed. 

However, none of it would be chargeable at 40% - you will be a basic rate taxpayer. 

Thank you. The aim is just to make a payment to get me into 20% again.