How much to pay into SIPP

fuzzzzy

On my payslips my taxable pay includes a taxable private medical insurance benefit.

When I am working out how much I can pay into my SIPP can I just calculate 80% of my total taxable pay or do I need to exclude the private medical insurance benefit amount?

Payments into my work pension were by salary sacrifice.

DRS1

Taxable benefits in kind count as part of your relevant UK earnings. So I would include it.

DRS1

Link to Gov.uk page if it helps

PTM044100 - Contributions: tax relief for members: conditions - HMRC internal manual - GOV.UK

cc123mm456

You have a 'payrolled' benefit in kind (BIK).

To explain further, there are 2 ways that a BIK can be reported.

1. The P11D method, where, after the tax year end, the employer would have reported the taxable benefits on the P11D, and HMRC would then collect the additional tax due. In most case through a tax code change.
2. The 'payrolled' method, where the taxable value of the benefit is added to your gross taxable amount to calculate tax, but it is not included in the pay.

I believe that the HMRC preferred method is 'payrolled', and employers are gradually moving to that method.

So, provided that the 'taxable pay' number on your payslip includes the private medical insurance benefit, while that additional amount is not included in your final pay, then this 'taxable pay' number is the one that you need to use.

Check this LITRG page:

https://www.litrg.org.uk/pensions/paying-pensions/tax-relief-pension-contributions/

Under 'UK relevant earnings', the following are included:

• Employment income – any taxable wages, bonus, overtime or commission.
• Taxable benefits in kind.

Edit: I missed noticing it, but the link provided by DRS1 also points to that information, directly from HMRC.