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Threshold Income / Adjusted income - impact pensions tax relief

Mick70
Posts: 740 Forumite

Hi
do any posters have any knowledge on this ?
If your adjusted income is above £260k then for every £2 above that, the annual pension allowance of £60k is reduced by £1
Seems to be conflicting info out there when google it
Is it some thing you are meant to declare somehow on your self assessment, or would HMRC know and build it into their calculation, from the usual figures you key into your annual self assess tax return ?
Is this right , as an example ?
Gross Pay
+ Any bonuses
+ Interest on savings
+ Dividends received
+ Employers pension contributions (i "think" you ignore employee, unless it is salary sacrifice).
= Adjusted Income Amount
say if this was £300k.
The limit is £260k
Therefore you would be £40k above and for every £2 above the annual pension allowance of £60k is reduced by £1.
So the annual allowance would be reduced by £20k, to £40k.
Say if had paid £50k into pension , including tax relief and employer. That would then mean have paid in £10k too much (No allowances to c/fwd from prior three year).
So , there would be a Tax charge on this £10k , meaning would need to pay £4.5k Tax
Is that correct ?
Thanks
Mick
do any posters have any knowledge on this ?
If your adjusted income is above £260k then for every £2 above that, the annual pension allowance of £60k is reduced by £1
Seems to be conflicting info out there when google it
Is it some thing you are meant to declare somehow on your self assessment, or would HMRC know and build it into their calculation, from the usual figures you key into your annual self assess tax return ?
Is this right , as an example ?
Gross Pay
+ Any bonuses
+ Interest on savings
+ Dividends received
+ Employers pension contributions (i "think" you ignore employee, unless it is salary sacrifice).
= Adjusted Income Amount
say if this was £300k.
The limit is £260k
Therefore you would be £40k above and for every £2 above the annual pension allowance of £60k is reduced by £1.
So the annual allowance would be reduced by £20k, to £40k.
Say if had paid £50k into pension , including tax relief and employer. That would then mean have paid in £10k too much (No allowances to c/fwd from prior three year).
So , there would be a Tax charge on this £10k , meaning would need to pay £4.5k Tax
Is that correct ?
Thanks
Mick
0
Comments
-
Have you looked at the guidance on gov.uk - https://www.gov.uk/guidance/pension-schemes-work-out-your-tapered-annual-allowance
Needs to be declared on self-assessment.
Would have thought on that level of income a tax advisor would be appropriate?0
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