Pension annual allowance. Which dates are used, payslip or provider receipt?

scaashiana

Hi

I've searched the forum but can't find an answer.  Apologies if I'm repeating an obvious question.

In calculating your pension contribution in a tax year, should we be using the date that pension left our salary, or the date the our pension provider received that contribution?  

wjr4

Provider receipt 

scaashiana

This is interesting (for me at least!)

My payday is the last day of each month, which is the day that my pension leaves my salary. 
My pension provider receives that contribution around 2 weeks later.

This means that I can adjust my 31st March pension contribution to (for example) 100%, thereby reducing my tax burden in the tax year of 31st March, whilst not exceeding my pension allowance, because that pension contribution will fall into the following tax year, thereby part of the of the new £60k allowance in the next tax year.

(BTW : I'm already utilising my 3 year pension allowance carry forward)

Now before you say "Yes, but it evens itself out over the year, because the same applies in the next tax year", what I didn't realise is that I could use specifically that March contribution more tax effectively in the calendar year that I retire (I'm planning to retire in month April).  Both to reduce my tax burden in one year AND to utilise more of my pension allowance in the following year.

Apologies for boring you if this is a well known fact!  I'm still navigating my way around planning my retirement and this has come as news to me.  I hope this gives food for thought to others that (like me) were not aware.

Dazed_and_C0nfused

wjr4 said:

Provider receipt 

Given the op hasn't said which method their employer uses I'm not sure that is always the correct answer.

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm041000

scaashiana

Dazed_and_C0nfused said:

wjr4 said:

Provider receipt 

Given the op hasn't said which method their employer uses I'm not sure that is always the correct answer.

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm041000

For the record, my contribution is paid via employer deduction via payroll.  This contribution reaches my pension administrator (L&G) around 2 weeks after it leaves my salary.

Dazed_and_C0nfused

scaashiana said:

Dazed_and_C0nfused said:

wjr4 said:

Provider receipt 

Given the op hasn't said which method their employer uses I'm not sure that is always the correct answer.

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm041000

For the record, my contribution is paid via employer deduction via payroll.  This contribution reaches my pension administrator (L&G) around 2 weeks after it leaves my salary.

But are they deducting payments under the net pay or relief at source method?

As you refer to "my contribution" I'm assuming this isnt salary sacrifice.

scaashiana

Dazed_and_C0nfused said:

scaashiana said:

Dazed_and_C0nfused said:

wjr4 said:

Provider receipt 

Given the op hasn't said which method their employer uses I'm not sure that is always the correct answer.

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm041000

For the record, my contribution is paid via employer deduction via payroll.  This contribution reaches my pension administrator (L&G) around 2 weeks after it leaves my salary.

But are they deducting payments under the net pay or relief at source method?

As you refer to "my contribution" I'm assuming this isnt salary sacrifice.

Sorry if I've not been clear.  This is salary sacrifice.  When I've said "my contribution", I've meant my contribution that is deducted from my PAYE salary