Calculating Correct Net Contribution

bonnyrigger

I'm about to get 35k TFLS from my DB pension having retired at end of May. Mrs is still working until end of September, she'll have gross income in this year of about 25k (but of course they'll have been taxing her as though she was going to earn 50k). Her existing work pension contribution is only about 2.5k to end of Sep deducted at source.  We can, I reckon, add 22.5k gross to her new (not yet in existence) SIPP, but working out the net to achieve that seems complicated as we live in Scotland. I'll be giving her 30% only of my TFLS to avoid any recycling issues and she'll take the rest from her ISA.
Has anyone got a good spreadsheet or website I could work out the net on?

QrizB

I think you might be overcomplicating things here.

An £18k contribution to a relief-at-source pension will get £4.5k of tax relief to make £22.5k in total.

bonnyrigger

So I can ignore the Scottish aspect with 19, 20, 21 and 42% rates applied to different bits of her salary? I agree if we were in England it would be easy.

Dazed_and_C0nfused

bonnyrigger said:

I'm about to get 35k TFLS from my DB pension having retired at end of May. Mrs is still working until end of September, she'll have gross income in this year of about 25k (but of course they'll have been taxing her as though she was going to earn 50k). Her existing work pension contribution is only about 2.5k to end of Sep deducted at source.  We can, I reckon, add 22.5k gross to her new (not yet in existence) SIPP, but working out the net to achieve that seems complicated as we live in Scotland. I'll be giving her 30% only of my TFLS to avoid any recycling issues and she'll take the rest from her ISA.
Has anyone got a good spreadsheet or website I could work out the net on?

You only ever get 20% added by the pension company.

So if you want to get £22,500 gross into a SIPP then you would pay over £18,000 and £4,500 would be added in tax relief.

bonnyrigger

Ah OK, makes it a lot easier. Thanks for the help.

Dazed_and_C0nfused

bonnyrigger said:

Ah OK, makes it a lot easier. Thanks for the help.

If she is due some additional relief then she has to sort that out with HMRC.  And she would see the benefit, it doesn't get added to her SIPP.

FIREDreamer

bonnyrigger said:

I'm about to get 35k TFLS from my DB pension having retired at end of May. Mrs is still working until end of September, she'll have gross income in this year of about 25k (but of course they'll have been taxing her as though she was going to earn 50k). Her existing work pension contribution is only about 2.5k to end of Sep deducted at source.  We can, I reckon, add 22.5k gross to her new (not yet in existence) SIPP, but working out the net to achieve that seems complicated as we live in Scotland. I'll be giving her 30% only of my TFLS to avoid any recycling issues and she'll take the rest from her ISA.
Has anyone got a good spreadsheet or website I could work out the net on?

It isnt recycling if you use YOUR tax free cash to pay money into SOMEONE ELSE’s pension. 😃

bonnyrigger

Sorry about bumping this back up, but I figured out I have unused allowance as well as Mrs.
Chatty has come up with the figures below, but seems to be saying that DB pension input doesn't count against my limit (I.e. my gross salary for Apr + May) but not sure this is right, would be obliged if someone could confirm.

Selected ChatGPT output.

You're absolutely right — and great spot. For defined benefit (DB) pensions, the pension input amount is indeed calculated as:

\text{Increase in annual pension} \times 16

This reflects the deemed growth in the value of your DB pension over the year, which is included in your Annual Allowance usage.

So let's walk through that again with that in mind.

---

🔁 Revised Calculation with DB Pension Input

📌 Your figures:

• DB pension increase: £157.56/year
• Pension input amount (for AA purposes) = £157.56 × 16 = £2,520.96

This counts toward the £60,000 Annual Allowance, not toward the earnings cap for relief, but it’s important if you're checking total pension contributions.

---

✅ Updated Summary

Item	Value (£)	Notes
Relevant UK earnings (salary)	7,720	Limit for tax-relieved contributions
AVC contributions (gross)	2,000	Uses part of the £7,720 relief cap
DB pension input	2,520.96	Counts toward Annual Allowance (60k)
Remaining relief-eligible gross	5,720	£7,720 − £2,000 (AVC)
Max net SIPP contribution	4,576	£5,720 ÷ 1.25

✅ So, Final Answer (No Change to Relief Limit):

• You can still contribute up to £4,576 net to a Relief at Source SIPP, and get it grossed up to £5,720, without exceeding your earnings cap.
• Your total pension input for Annual Allowance purposes will be:
  • £2,000 (AVC) + £2,521 (DB input) + £5,720 (SIPP grossed-up) = £10,241, well within the £60,000 Annual Allowance.

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Would you like me to check if you have carry forward available from previous years — which might allow you to exceed the earnings limit in certain employer-contribution scenarios?

DRS1

Loathe as I am to say this it sounds like Chatty is right.

bonnyrigger

Thanks, I'll use the 4576 figure for the SIPP.

Dazed_and_C0nfused

bonnyrigger said:

Sorry about bumping this back up, but I figured out I have unused allowance as well as Mrs.
Chatty has come up with the figures below, but seems to be saying that DB pension input doesn't count against my limit (I.e. my gross salary for Apr + May) but not sure this is right, would be obliged if someone could confirm.

Selected ChatGPT output.

You're absolutely right — and great spot. For defined benefit (DB) pensions, the pension input amount is indeed calculated as:

\text{Increase in annual pension} \times 16

This reflects the deemed growth in the value of your DB pension over the year, which is included in your Annual Allowance usage.

So let's walk through that again with that in mind.

---

🔁 Revised Calculation with DB Pension Input

📌 Your figures:

• DB pension increase: £157.56/year
• Pension input amount (for AA purposes) = £157.56 × 16 = £2,520.96

This counts toward the £60,000 Annual Allowance, not toward the earnings cap for relief, but it’s important if you're checking total pension contributions.

---

✅ Updated Summary

Item	Value (£)	Notes
Relevant UK earnings (salary)	7,720	Limit for tax-relieved contributions
AVC contributions (gross)	2,000	Uses part of the £7,720 relief cap
DB pension input	2,520.96	Counts toward Annual Allowance (60k)
Remaining relief-eligible gross	5,720	£7,720 − £2,000 (AVC)
Max net SIPP contribution	4,576	£5,720 ÷ 1.25

✅ So, Final Answer (No Change to Relief Limit):

• You can still contribute up to £4,576 net to a Relief at Source SIPP, and get it grossed up to £5,720, without exceeding your earnings cap.
• Your total pension input for Annual Allowance purposes will be:
  • £2,000 (AVC) + £2,521 (DB input) + £5,720 (SIPP grossed-up) = £10,241, well within the £60,000 Annual Allowance.

---

Would you like me to check if you have carry forward available from previous years — which might allow you to exceed the earnings limit in certain employer-contribution scenarios?

What does your final payslip/P45 show your taxable earnings to May as?

You refer to gross salary at one point but that is unlikely to be a relevant factor here (for the SIPP contribution).