First SIPP with 100K lump sum allowed?

Marcon

https://forums.moneysavingexpert.com/discussion/comment/82006990#Comment_82006990

Could be I've misinterpreted what they've said, but their references are all relating to personal contributions with no account taken of the employer contribution - a common mistake, so worth flagging, not least for the benefit of others reading the thread.

zagfles

https://forums.moneysavingexpert.com/discussion/comment/82007032#Comment_82007032

There's loads of room for employer contributions in OPs example, they have at least £40k carry forwards minus employer conts and only using £20-30k.

micklesthwaite

I did mean the total, including employer contributions and my workplace contributions plus tax retuned. This does raise one last question though.

To calculate how much allowance has been used by my workplace pension I would need to multiply my contribution by 1.25 to take account of the government addition, but does the government also add the tax back to the employer's contribution?

For example, if the employee's yearly contribution is £1000 and the employer's is £600, do you calculate £1250 plus £750 = £2000 allowance used?

NoMore

Employer contribution doesn't give you tax relief.

DRS1

I don't know about your pension but I believe some people are able to log into their pension portal/webpage and see the money coming into their pension. This would probably show up as three separate streams: employer contributions, employee contributions and tax relief. It may be worth seeing if you can do that for your pension.

Secret2ndAccount

When your employer diverts your pay into a pension they typically take it out at the top of the payslip, before the point where tax gets deducted. £100 earned → £100 to pension. No further tax relief needs to be added.

If you earn £100, take home £80 after tax, and pay £80 into SIPP, the taxman tops it back up to £100. End result is the same.

There are cases that fall outside this example. My point is that you are not being robbed of any tax relief, either way.

micklesthwaite

Thanks for the answers.

As far as I can see from reading a bit more, if someone earns, say 40K a year, then they can put 40K into a pension with the government tax relief as their personal contributions are limited by their salary level. However the employers contribution could add up to another 20K as the total contributed would be under the yearly limit of 60K

Is that correct?

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/82008778#Comment_82008778

Indeed, they can go over the 60k limit with employer contributions if they have carry forward allowance available and meet the criteria