Most tax efficient sum to put into AVC fund

rrwfotr

hi all just got a pension question I'm a bit clueless with regards to all this stuff!

My pension question is that I currently earn the following:

Basic £38400 (0.06 % paid into final salary scheme= £2304 paid into pension)
car allowance £5000
Pot bonus £3840

Total per year minus (final salary pension scheme cont) = £44936

My question is what would be the best possible sum to invest into an avc fund per month so I don't pay 40% tax?

jem16

Depends on your tax code.

From next year 40% rate starts at £36,000 so if your tax code was 543L the 40% tax would start at £36,000 plus £5435 which is ££41,435.

So anything above that would be taxable at 40% and this is what you would want to pay into a pension.

rrwfotr

Hi my current tax is : 522L. So how much would I need to invest to avoid 40% tax next FY? Cheers

CLAPTON

next tax year the personal allowance is 5435 and 40% tax band starts at 36,000 so you can earn 41,435 before paying 40%
however you already pay some pension contributions that are tax free of about 2304

so you can earn up to 43,739 before paying 40% tax.