APC's into the LGPS

Paul_255

in 2023/24 my taxable income after deducting my personal allowance was £85,919.

I made an APC of £40,000 into the LGPS.

What is my tax for 23/24.

Paul_255

This is the answer  provided by Chatgpt - which I believe to be correct. ??

🧾 Scenario:

• Taxable income after personal allowance: £85,919

• Additional Pension Contribution (APC): £40,000

• Tax year: 2023/24

• Tax bands for 2023/24 (England):

  • Basic rate: £0 – £37,700 at 20%

  • Higher rate: £37,701 – £125,140 at 40%

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🧮 Step 1: Apply the Pension Contribution

Since you’re making an Additional Pension Contribution (APC) of £40,000, this will reduce your taxable income.

• New taxable income:
  £85,919 (initial taxable income) − £40,000 (APC) = £45,919

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🧮 Step 2: Calculate Tax on £45,919

Now let's break down your tax calculation:

Tax in the Basic Rate Band (20%):

• The first £37,700 of your income is taxed at 20%.

• £37,700 × 20% = £7,540

Tax in the Higher Rate Band (40%):

• The remaining income after £37,700 (i.e., £45,919 − £37,700 = £8,219) is taxed at 40%.

• £8,219 × 40% = £3,287.60

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✅ Total Tax Payable:

• Tax on the basic rate band: £7,540

• Tax on the higher rate band: £3,287.60

• Total tax payable = £7,540 + £3,287.60 = £10,827.60

Paul_255

This is how my tax consultant worked it out

Dazed_and_C0nfused

Paul_255 said:

This is how my tax consultant worked it out

To get the correct answer you need to be clear which method was used to pay the APC.

The calculation your "tax consultant" has provided is based on it being a "relief at source" contribution.  This is where you pay the net contribution, the pension company adds 25% to make up the gross contribution.

In this instance that would have been £32,000 from you plus 25% = gross contribution of £40,000.

But I suspect that isn't what actually happened.

Maybe you could explain what did actually happen.

Paul_255

I paid £40k APC from my bank of my own money into the local government bank account.

Dazed_and_C0nfused

Paul_255 said:

I paid £40k APC from my bank of my own money into the local government bank account.

Have you explained that to your tax consultant?

They clearly think it was a different type of contribution (relief at source).

That calculation looks like Self Assessment so if you have filed an incorrect return you will need to submit an amendment. 

1.  To remove the erroneous claim for the relief at source contribution
2.  To include the APC in the correct box on the return.

All the above assumes you were eligible to contribute £40k in that tax year.

Paul_255

method = BACS payment. ??

Paul_255

Thanks
I thought so.
So the Chatgpt calculation is correct ??

Dazed_and_C0nfused

Paul_255 said:

Thanks
I thought so.
So the Chatgpt calculation is correct ??

From what you have posted, yes.

Removing the relief at source contribution will add £8,000 to your tax liability.

Adding the APC (which received no tax relief at the point it was paid) then reduces it by £16,000.

Net benefit to you of £8,000.

Paul_255

You are indeed the knowledgeable one.

I knew that already from reading your previous posts.

All hail Dazed_and _C0nfused.

Thanks