Pension contributions

brucethefish

Hi

This might not be the correct section to ask

If someone earned £110,000 on PAYE in 25/26, could they make a personal pension contribution now to reduce their additional tax liability?

Mean to add, they already have a pension in place, employer only contributions to date

NoMore

any contribution now would only affect their tax position for this tax year. Your too late to contribute for the 25/26 year.

brucethefish

Ah I thought that would be the case, thank you

I take it payment can be made to clear the amount due rather than tax code changing

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81959090#Comment_81959090

Yes. But when and how that can be done depends on how the tax owed is established.

Is it someone completing a tax return?

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/6663749/pension-contributions

If the individual is prioritising reducing their tax liability, I understand there is a way to do so after the end of the tax year by making Gift Aid donations. I am sure others will be able to confirm and advise how.

brucethefish

No, no tax return, just PAYE income and wasnt aware of the £100k ceiling, year end bonus took them over

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81959487#Comment_81959487

They can expect quite a chunky tax bill then as they will probably have received the full Personal Allowance when a reduced one is the final position.

And this is where the 60% tax hit comes into play and pension contributions would have been incredibly tax efficient.

webmasterpolo

As others have said, too late now, but it is an excellent point to monitor such potential issues in March every year to make sure you have the time and can make informed choices about what to do and what the tax will look like if you're going to be close to any tax cliff edge like 50k, 60k, 100k, 240k.

I used to make a private pension contribution (in addition to usual workplace pension) at the very start of April every year when my variable income was around the 100k mark to bring me under for tax.

If you find out your last bonus for the tax year at the end of March you have a few days at most to make the contributions, so you really want the account already open and ready to use well in advance of this. Just a quick log in or phone call and a debit card and you're done.

If your March pay slip shows YTD income of £105k you want to add 5k, all the maths is done for you on the payslip. If you're self employed it's harder to track but still well worth trying to.