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SIPP contribution calculation Query
Peter167
Posts: 13 Forumite
I am aware of the basic 22% grossing up for contribution to a SIPP. If I earn say 20K gross, that gives me a net income of £15,389.10, of which 2,982.90 is Income tax at 22% after the usual tax allowance. However, the contribution of 15,389.10 is grossed up to 19,730 (ish). Is this correct, do you really get back virtually all of your Income tax and NI, rather than just the Income tax as I would have expected?
0
Comments
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Yes it is correct.
You are basically getting tax relief on the full £19730 whereas you only actually pay tax on your gross pay minus your personal allowance.0 -
Thanks, that's interesting. So using salary sacrifice, unless you get your employers NI, you don't really gain much over this method of contribution?0
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