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

Sea_Shell

Marcon said:

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?

Quick side question?

Can making the maximum contribution, as a non earner, break the recycling rules?

Eg the £2880, that gets grossed up?

Or is anyone allowed to do that, regardless of their previous contributions or TFLS taken?

Triumph13

OP's pension contributions are via sal sac, so they will be a net pay arrangement.  The £15.9k taxable salary number they quote is from their P45.  With a net pay scheme this will show the number after pension contributions have been deducted.

It looks a pretty solid assumption that they had notional earnings (pre sacrifice) of £24.9k and sacrificed £9k to leave taxable earning of £15.9k.  The difference between the amount sacrificed and the total pension contributions of £12.9k will presumably be employer contributions, including any sharing of NIC savings.

Dazed_and_C0nfused

Triumph13 said:

OP's pension contributions are via sal sac, so they will be a net pay arrangement.  The £15.9k taxable salary number they quote is from their P45.  With a net pay scheme this will show the number after pension contributions have been deducted.

It looks a pretty solid assumption that they had notional earnings (pre sacrifice) of £24.9k and sacrificed £9k to leave taxable earning of £15.9k.  The difference between the amount sacrificed and the total pension contributions of £12.9k will presumably be employer contributions, including any sharing of NIC savings.

It is one or the other.

disgruntled1234

Thank you all once again for your responses.  I'll hopefully clarify things here but I'm erring on the side of caution re: recycling rules so will most likely not make any further contributions this year

Gross salary Apr 2025 to Sep 2025 - £24,968.34

Taxable income - £15,910.80

Tax paid - £1924.20

Tax refunded - £1256.20

My pension contribution (Sal Sac) - £10445.11

Company pension contribution - £2460.20

Total Gross pension contribution - £12,905.31

I've made no further lump sum payments into my pension this tax year other than what has gone in from my salary

total tax free lump sums I've taken out this tax year (in preparation for my retirement and to provide income in lieu of a salary) - £10,000

Many thanks

MallyGirl

Sea_Shell said:

Marcon said:

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?

Quick side question?

Can making the maximum contribution, as a non earner, break the recycling rules?

Eg the £2880, that gets grossed up?

Or is anyone allowed to do that, regardless of their previous contributions or TFLS taken?

Recycling not an issue for contributions less than £7.5k
https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm133810

Sea_Shell

MallyGirl said:

Sea_Shell said:

Marcon said:

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?

Quick side question?

Can making the maximum contribution, as a non earner, break the recycling rules?

Eg the £2880, that gets grossed up?

Or is anyone allowed to do that, regardless of their previous contributions or TFLS taken?

Recycling not an issue for contributions less than £7.5k
https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm133810

Thanks, but I read that as being in relation to the lump sum, rather than contributions...

"the amount of the pension commencement lump sum, taken together with any other such lump sums taken in the previous 12-month period, exceeds

£7,500 for events on or after 6 April 2015, or"

Isthisforreal99

disgruntled1234 said:

Thank you all once again for your responses.  I'll hopefully clarify things here but I'm erring on the side of caution re: recycling rules so will most likely not make any further contributions this year

Gross salary Apr 2025 to Sep 2025 - £24,968.34

Taxable income - £15,910.80

Tax paid - £1924.20

Tax refunded - £1256.20

My pension contribution (Sal Sac) - £10445.11

Company pension contribution - £2460.20

Total Gross pension contribution - £12,905.31

As has been said on a few occasions nkw the salary sacrifice contributions are not your contributions but employer ones.