Now I've retired, trying to decide if I should pay anything more into my DC pension this tax year.

Dazed_and_C0nfused

af1963 said:

Did you also receive any taxable "benefits in kind"  (normally reported on a P11D each year) ? If so, you can add those to the gross salary when working out how much you can pay in.

True if the employer hasn't been payrolling them.  But I really don't think the op's gross salary is a factor in this.

Tax year 2025/2026

Gross Salary - £24,968.34 (only worked 6 months of this tax year)

Taxable amount - £15,910.80

Total pension contributions (including company) - £12,905.31.

Secret2ndAccount

We still don't have consistency here.  You earned 26k, but you asked your company to scrape 10k off the top and send it straight to your pension. That would show as a company contribution, and your salary would be 16k. Company puts its own contribution in too. Total contribution 13k. No tax paid, no relief due.
This would mean you haven't made any personal contributions this year, so you can pay 80% of 16k, say 12.5k into a SIPP, and the SIPP would be topped up by 25% (equal to the missing 20%) meaning ~16k in the SIPP.

However, you say you have received a £1,250 tax refund. Have you already made a personal contribution which you didn't include in the 12.905 total?  When you say 'tax refund' do you mean the top-up, paid into the SIPP - not a payment received by you?  A 1256 top-up would imply a 5,024 payment, so you've already put 5,024+1256 = 6280 into your pension, from your (post-sacrifice) salary this year. That means you can put in 15910 - 6280 = 9630 more. You put in 80% of that: 7,700 and it gets topped back up to 9,630.
Your personal contributions, including the tax top-up, should not exceed your earnings.
Please clarify how you got a 1,250 refund?

Dazed_and_C0nfused

Secret2ndAccount said:

We still don't have consistency here.  You earned 26k, but you asked your company to scrape 10k off the top and send it straight to your pension. That would show as a company contribution, and your salary would be 16k. Company puts its own contribution in too. Total contribution 13k. No tax paid, no relief due.
This would mean you haven't made any personal contributions this year, so you can pay 80% of 16k, say 12.5k into a SIPP, and the SIPP would be topped up by 25% (equal to the missing 20%) meaning ~16k in the SIPP.

However, you say you have received a £1,250 tax refund. Have you already made a personal contribution which you didn't include in the 12.905 total?  When you say 'tax refund' do you mean the top-up, paid into the SIPP - not a payment received by you?  A 1256 top-up would imply a 5,024 payment, so you've already put 5,024+1256 = 6280 into your pension, from your (post-sacrifice) salary this year. That means you can put in 15910 - 6280 = 9630 more. You put in 80% of that: 7,700 and it gets topped back up to 9,630.
Your personal contributions, including the tax top-up, should not exceed your earnings.
Please clarify how you got a 1,250 refund?

I think the op is referring to a refund of some of the PAYE tax deducted from the £15,910.

Which if it is that is of no relevance to their question.

Secret2ndAccount

Dazed_and_C0nfused said:

I think the op is referring to a refund of some of the PAYE tax deducted from the £15,910.

Which if it is that is of no relevance to their question.

The same thought occurred to me. OP needs to clarify.

Dazed_and_C0nfused

Secret2ndAccount said:

Dazed_and_C0nfused said:

I think the op is referring to a refund of some of the PAYE tax deducted from the £15,910.

Which if it is that is of no relevance to their question.

The same thought occurred to me. OP needs to clarify.

100% agree!

Marcon

disgruntled1234 said:

I have taken a few small tax free lump sums this year, but the money I would potentially be paying back into my pension would come from savings, not from those tax free lump sums.

That sentence makes me think:

• you are concerned about pension recycling; and
• that you believe the fact that the money would come from savings would somehow get you round the issue (if it is actually an issue). 

It won't. HMRC wouldn't be impressed by your argument, so you (and anyone else reading this and thinking that it would 'work') need to be aware that's the case. After all, why would you withdraw tax free cash from your pension and then contribute from savings unless your main motivation was to get extra tax relief - something the recycling rules were introduced to prevent?

Secret2ndAccount

Marcon said:

...

• you are concerned about pension recycling; and
• that you believe the fact that the money would come from savings would somehow get you round the issue (if it is actually an issue). 

It won't. HMRC wouldn't be impressed by your argument, so you (and anyone else reading this and thinking that it would 'work') need to be aware that's the case. After all, why would you withdraw tax free cash from your pension and then contribute from savings unless your main motivation was to get extra tax relief - something the recycling rules were introduced to prevent?

Also 100% agree.
If the total TFLS withdrawals are less than £7,500 in a year, recycling is not a concern though

disgruntled1234

Thank you all for your comments and although I don’t think I’d be able to contribute more than a few thousand pounds into my pension, recycling is something that had crossed my mind so at this stage, I don’t think it’s worth me doing anything.

the £1256 refund was a tax rebate so probably not really relevant to this discussion.

apologies for causing any confusion and thank you all once again for responding.

Dazed_and_C0nfused

disgruntled1234 said:

Thank you all for your comments and although I don’t think I’d be able to contribute more than a few thousand pounds into my pension, recycling is something that had crossed my mind so at this stage, I don’t think it’s worth me doing anything.

the £1256 refund was a tax rebate so probably not really relevant to this discussion.

apologies for causing any confusion and thank you all once again for responding.

If you provided the information requested it could be £15k+ you could add in this tax year (inclusive of the £3k in tax relief)

disgruntled1234

Dazed_and_C0nfused said:

 disgruntled1234 said:

Thank you all for your comments and although I don’t think I’d be able to contribute more than a few thousand pounds into my pension, recycling is something that had crossed my mind so at this stage, I don’t think it’s worth me doing anything.

the £1256 refund was a tax rebate so probably not really relevant to this discussion.

apologies for causing any confusion and thank you all once again for responding.

If you provided the information requested it could be £15k+ you could add in this tax year (inclusive of the £3k in tax relief)

I may do that later but I’m not at my PC at the moment, to put all the figures together.  I have taken a few small amounts of tax free cash this tax year already so may still fall foul of recycling rules anyway, which I hadn’t really thought too much about until it was mentioned in an earlier post.

thank you once again.