Sipp and tax question.

[tapandunwrap]

should i contribute 80% or 100% of the value of the amount I am trying to take from PAYE salary to reduce my gross pay?

Knowing that the Gov tops up 20%, does that 20% contribute to the amount i'm reducing my gross by, or should I contribute 100% of the amount and also see the 20% added into the SIPP.

Hope that is clear - trying not to have to lock away more than is absolutely necessary.

thank you

Edited by tapandunwrap on Saturday 27th March 23:32

[Mattt]

If you pay in £8000, the Gov will add £2000.

You then claim £2000 as a rebate at the end of the tax year - either via self assessment or just call them and tell them what you paid in.

That would then be £10000 off your taxable salary to try to bring it down below any limits.

Worth double checking though.

[Carbon Sasquatch]

If it's salary sacrifice, then 100% - because it will be paid out of your gross salary before any tax has been deducted.

If you make a contribution from your net salary - after tax has been deducted then 80% as the pension provider will then reclaim the other 20% for tax already paid. If you are a 40% tax payer, then you can reclaim the additional 20% as part of your tax return.

[tapandunwrap]

Thank you! This is very helpful.