Pension contributions can be used to relieve LC19

[Delendog]

Yeah I found that, am I being dumb .. which one is it? I couldn't see one for income tax.

So loan of £100K
Salary of £11.5k
Pension of £100k

What is the tax due?

£20,000 assuming you contributed 100K and gov added 25K to that

[webberg]

Yeah I found that, am I being dumb .. which one is it? I couldn't see one for income tax.

So loan of £100K
Salary of £11.5k
Pension of £100k

What is the tax due?

I would say (at risk of being shot at):

Total income £111.5k

Personal allowance say £12k.

Taxable income £99.5k

Tax due at 20% = £19,900.

Pension contribution actually paid = £83,333

Pension fund reclaims from Government £16,667.

Net tax paid = £19,900-£16,667 = 2,333.

Cash outlay = £83,333 on pension and £2,333 on tax = £85,666.

Coconut shy is now open.

[Delendog]

I think you can pay more than 130k - Look at this - case study 2

https://adviser.royallondon.com/tech...-high-incomes/

Pension payments made are taken off income when calculating the threshold income

I used this and for me the answer was 130K

https://www.tax.service.gov.uk/paac

[Cyclonic]

FREE online pensions calculators | Hargreaves Lansdown

So for my example of 200k income including loans and a net 80k contribution to a pension I could get further tax relief as a high rate tax payer via my SA. Is this possible?

"Claim back even more via your tax return
As a 45% top rate taxpayer you can claim back up to an extra £27,100. Your pension contribution could effectively cost you as little as £52,900."

[Loan Ranger]

From my calculations £130k pension contribution is the max you could use in 2019 taking £40k for each of the previous 3 years if unused + £10K for 2019 as the allowance for that year will be reduced for all income over £110K.

The taper only starts at £150k income, and you lose £1 for every £2 above £150k. Above £210k, your allowance is capped at £10k.
https://www.pensionsadvisoryservice....OT024_V1.2.pdf

Income........Maximum pension contribution (including carry forward)
£150k.................£140k
£170k.................£130k
£190k.................£120k
£210k.................£110k
>210k.................£110k

Example

Using tax calculator
https://www.uktaxcalculators.co.uk

Your total income in 2018/19 is £190k
You make maximum pension contribution of £120k
The pension provider reclaims basic rate tax of £30k. (Total in pension pot = £150k)
You pay tax through self-assessment of £46,360. (this includes the £30k the pension provider has reclaimed)

Total amount of tax to Exchequer = £16,360


ps. this does assume you've got £166,360 lying around! (£120k for pension + £46,360 for tax)

[starstruck]

I would say (at risk of being shot at):

Pension contribution actually paid = £83,333

Pension fund reclaims from Government £16,667.

Why 83,333 and 16,667 and not 80,000 and 20,000 ?

From HL - "To make a gross pension contribution of £100,000 you only need to pay: £80,000. The government will add 20% basic rate tax relief: £20,000."

[starstruck]

The taper only starts at £150k income, and you lose £1 for every £2 above £150k. Above £210k, your allowance is capped at £10k.
https://www.pensionsadvisoryservice....OT024_V1.2.pdf

Income........Maximum pension contribution (including carry forward)
£150k.................£140k
£170k.................£130k
£190k.................£120k
£210k.................£110k
>210k.................£110k

Example

Using tax calculator
https://www.uktaxcalculators.co.uk

Your total income in 2018/19 is £190k
You make maximum pension contribution of £120k
The pension provider reclaims basic rate tax of £30k. (Total in pension pot = £150k)
You pay tax through self-assessment of £46,360. (this includes the £30k the pension provider has reclaimed)

Total amount of tax to Exchequer = £16,360

Check out case study 2 - It shows someone carrying forward
https://adviser.royallondon.com/tech...-high-incomes/

[Loan Ranger]

Check out case study 2 - It shows someone carrying forward
https://adviser.royallondon.com/tech...-high-incomes/

My head is starting to hurt. Could they make it any more damn complicated!

So, with maximum carry forward of £140k, you could earn £250k (£140k + £110k) before the taper starts?

So, my previous table should actually look like this?

Income........Maximum pension contribution (including carry forward)
£250k.................£140k
£270k.................£130k
£290k.................£120k
£310k.................£110k
>310k.................£110k

[starstruck]

My head is starting to hurt.

Tell me about it - my spreadsheet is going round in circles!

[Cyclonic]

Why 83,333 and 16,667 and not 80,000 and 20,000 ?

From HL - "To make a gross pension contribution of £100,000 you only need to pay: £80,000. The government will add 20% basic rate tax relief: £20,000."

Looks like Webberg has taken 20% relief as being 20% of the net contribution (83,333) rather than the gross of 100,000 which HL have used.