AVC help

sbrinn

just after some advice.

I have a part time job and a pension which push me into the high rate tax bracket. The 40% tax is taken from my pension. I am on a BR tax code for my part time job.

I took out an AVC a couple of years ago to reduce my tax which comes out of my pay obviously. I therefore get the 20% tax relief on the pay.

Question is - do I need to do anything else to ensure I get the full 40% benefit. Obviously my taxable income is reduced so I do pay less tax overall, but I am not sure if I need to do a self assessment or report the AVC contributions to HMRC seeing as my actual pay is only taxed at the 20%

Dazed_and_C0nfused

If you are making these pension contributions using the net pay method, which does seem to be the case, then there is no further relief due, you are already automatically getting the benefit of higher rate relief.

If you calculate your overall liability with and without these contributions you will understand exactly how it works.

Obviously my taxable income is reduced

Isthisforreal99

If thw contribution comes off before tax is deducted then you are getting all the relief you are entitiled. Although you only pay 20% at your employment source, when adding your 2 incomes together then that is net of your AVC contribution. For example if your gross earnings were £35k and ypu paid £5k into AVC (that was deducted before PAYE operated) then your taxable pay would be £30k - meaning you pay less at 40% when you total your income up.

zagfles

Log onto your tax account and make sure the estimates for both the pension and the job are correct, the job income should be the income after the AVCs and other pension conts have been taken off (assuming "net pay" or sal sac).

zagfles

https://forums.moneysavingexpert.com/discussion/comment/82009377#Comment_82009377

That assumes the income estimates are correct, might be that OP has a tax code on the pension with a rate band adjustment assuming £10k job income, if income is only £5k after AVCs taken off he/she will be overtaxed.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/82009451#Comment_82009451

True, but it would all be automatically corrected when HMRC go their end of year calculation. There isn't a claim the op needs to make as such.

But they may be able to get things more accurate during the year by updating their estimated earnings.

NormalNorman

My main job takes me into HRT. I also have a local PT job. The way I work it is I salary sacrifice 25%+ of the main job into pension so there is enough room left in the BRT band for the PT earnings. The PT job has its own public sector pension taken off too. I’ve also wondered if AVCs on the PT job is worthwhile? The HMRC app is great for seeing at a glance how close I get to the tax band limits which in Scotland are tight. Cheers