Pension contribution tax relief
Discussion
In the telegraph at the weekend they stated the following figures:
£20,000 invested into a SIPP attracts basic rate tax relief of £5,641 and a further tax relief of 18% ie. £4,615 for higher rate tax payers, making a total of £30,526.
Are these figures correct? The higher rate one looks wrong to me.
£20,000 invested into a SIPP attracts basic rate tax relief of £5,641 and a further tax relief of 18% ie. £4,615 for higher rate tax payers, making a total of £30,526.
Are these figures correct? The higher rate one looks wrong to me.
It's explained on www.hmrc.gov.uk/manuals/rpsmmanual/RPSM05201050.htm
Just multiply the figures shown on the hmrc page by 20,000/780 to get the same figures as quoted in the Telegraph
Just multiply the figures shown on the hmrc page by 20,000/780 to get the same figures as quoted in the Telegraph
No, the extra tax relief is 18% of the "grossed up" contribution.
If the gross contribution is £20,000 the total relief (40%) is £8,000.
You actually pay £15,600 as a net of 22% tax relief premium and the balance of £3,600 (18%) is claimed through your self assessment tax return.
That'll be £75 please.
ETA: If your net contribution is £20,000 the gross is £25,641. (20,000/.78) Total relief is £10256.40, (25641 x 0.4) so balance of 18% relief would be £4615.38
If the gross contribution is £20,000 the total relief (40%) is £8,000.
You actually pay £15,600 as a net of 22% tax relief premium and the balance of £3,600 (18%) is claimed through your self assessment tax return.
That'll be £75 please.
ETA: If your net contribution is £20,000 the gross is £25,641. (20,000/.78) Total relief is £10256.40, (25641 x 0.4) so balance of 18% relief would be £4615.38
Edited by percy flage on Thursday 29th March 10:49
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