Lump sum additional contribution

adam212dunn

We have recently downsized and one of the options under consideration is an additional contribution to my private pension as I approach my last few working years.

i understand the £60 rule and also how the carry over works for up to 3 years. 

My workplace pension is salary sacrifice so does that mean I am not eligible for tax relief on the additional contributions?

dunstonh

My workplace pension is salary sacrifice so does that mean I am not eligible for tax relief on the additional contributions?

You don't receive tax relief at source (i.e. via the provider).   You get it via your payroll instead.    So, you still get tax relief but it is handle in a different way.

Albermarle

If you just increase your salary sacrifice contribution ( by asking your emloyer) you will automatically get all the tax relief ( by not paying any tax on the amount sacrificed) . You can not sacrifice below the National Minimum Wage though.

Or do you want to make separate lump sum contributions, that are not taken from your salary , into a separate pension? If so that is fine, you are just limited to your reduced salary ( after sacrifice)

So if you earn £40K and sacrifice £10K , your taxable salary is £30K . You can add up to £24K to your pension  and up to £6K tax relief would be added. 

Normally it is better to just increase the SS due to the NI savings. 

adam212dunn

Albermarle said:

If you just increase your salary sacrifice contribution ( by asking your emloyer) you will automatically get all the tax relief ( by not paying any tax on the amount sacrificed) . You can not sacrifice below the National Minimum Wage though.

Or do you want to make separate lump sum contributions, that are not taken from your salary , into a separate pension? If so that is fine, you are just limited to your reduced salary ( after sacrifice)

So if you earn £40K and sacrifice £10K , your taxable salary is £30K . You can add up to £24K to your pension  and up to £6K tax relief would be added. 

Normally it is better to just increase the SS due to the NI savings. 

thank you. It was the 2nd option I was thinking about so what you say makes perfect sense.  

Albermarle

adam212dunn said:

Albermarle said:

If you just increase your salary sacrifice contribution ( by asking your emloyer) you will automatically get all the tax relief ( by not paying any tax on the amount sacrificed) . You can not sacrifice below the National Minimum Wage though.

Or do you want to make separate lump sum contributions, that are not taken from your salary , into a separate pension? If so that is fine, you are just limited to your reduced salary ( after sacrifice)

So if you earn £40K and sacrifice £10K , your taxable salary is £30K . You can add up to £24K to your pension  and up to £6K tax relief would be added. 

Normally it is better to just increase the SS due to the NI savings. 

thank you. It was the 2nd option I was thinking about so what you say makes perfect sense.  

Just to note if your salary after sacrifice is still high enough to be a 40% taxpayer, you will need to inform HMRC of your contribution, so you get any higher rate relief due ( via salsac this happens automatically) .

adam212dunn

Thanks again.  That really helps