This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Self assessment and pensions relief

bob_op
Posts: 3
Joined: Thu Mar 19, 2015 10:46 am

Self assessment and pensions relief

Postby bob_op » Thu Mar 19, 2015 10:47 am

Hello, I will need to return a self-assessment for 2014-2015 and wanted to understand how to reduce my tax bill

My income for this year would be £134,379 with tax paid of £43,189

Looking at some online tax calculators it seems I own about £4,160 in tax

So my question is can I make a one of payment of £4000 into my pension which will reduce the tax bill to £160?

thanks

Ian McTernan CTA
Posts: 1232
Joined: Wed Aug 06, 2008 3:02 pm
Location: Bedford
Contact:

Re: Self assessment and pensions relief

Postby Ian McTernan CTA » Thu Mar 19, 2015 1:27 pm

No.

If you make a £4,000 (gross) pension contribution then you would reduce your tax bill from £4190 to around £3,390, saving £800 in tax, being the difference between the basic and higher rate tax bands.

If you are on a salary then your employer should calculate your PAYE better to avoid such a large underpayment arising in the first place..

I'd also suggest making pension contributions anyway as they are quite tax efficient.
McTernan Associates Ltd
Chartered Tax Advisers
Bedford
Email through link on website:
http://www.imcternan.com

bob_op
Posts: 3
Joined: Thu Mar 19, 2015 10:46 am

Re: Self assessment and pensions relief

Postby bob_op » Thu Mar 19, 2015 2:10 pm

thank you for the reply

So look like I need to do a £20k+ payment into my pension to clear the tax bill

Also if I were to make a payment up to say £40k would that mean I am due a tax refund?

Does the £40k annual limit include pension contributions I make via my employer?

King_Maker
Posts: 6538
Joined: Wed Aug 06, 2008 3:22 pm

Re: Self assessment and pensions relief

Postby King_Maker » Thu Mar 19, 2015 4:49 pm

The effective Income Tax Rate between £100,000 to £120,000 is 60% (increasing to 62% with 2% NI) for 2014-15.

A pension contribution can be worthwhile in these circumstances.

jason13
Posts: 153
Joined: Mon Mar 28, 2011 2:02 pm

Re: Self assessment and pensions relief

Postby jason13 » Thu Mar 19, 2015 9:30 pm

Does the £40k annual limit include pension contributions I make via my employer?
Yes, and it also includes contributions your employer makes.

However, you may have unused annual allowances from the past 3 years though that you may be able to carry forward. This might help: http://www.hmrc.gov.uk/tools/pension-al ... /index.htm


Return to “Income Tax”