I'm trying to make sense of the new pension taper rules and was hoping someone here might be able to offer a bit of guidance. Specifically, I'm trying to get clarity in respect of the definition of Threshold Income and what I can and can't do to reduce my income to try and get it below the GBP110k level so that taper rules don't kick in for contributions to my DC pension. To use some numbers for an example:
Income: 160k (this includes benefits in kind)
Pension Contributions paid via salary sacrifice in the tax yr: 15k
My understanding is that this would bring my Threshold Income down to 145k (160k-15k).
I have 50k of unused carry forward allowance and would like to bring my Threshold Income down to 105k.
From all of the research I have done, it seems that only "salary sacrifice" contributions can be used to reduce my threshold income. What I would like to do is pay into my DC an amount to get my threshold income down to 105k but I can't increase my salary sacrifice amounts for a one-off contribution and simply have to send in my cheque to my employers DC pension provider and make the contribution in that manner.
Would I still get credit for reducing my Threshold Income if I pay in a one-off deposit in this manner or does it have to go through my employer salary sacrifice, specifically?
I hope to pay-in an amount of 30k which should give me credit for 45k after the gross up (25% gross up added when the amount goes into my DC plan and the other 25% when I file my tax return).
Does this all seem in line and would it get my Threshold Income down to 105k?
Thanks!
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Pension Taper and Contribution Rules
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- Lemon Pip
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Re: Pension Taper and Contribution Rules
I think this is ok. However, because of the possibilty of misunderstanding, I'd rather you didn't take my word for it and suggest that you review carefully your circumstances against the guidance here:-
https://www.gov.uk/guidance/pension-sch ... -allowance
It does contradict your research which concluded that only salary sacrifice contributions work.
https://www.gov.uk/guidance/pension-sch ... -allowance
It does contradict your research which concluded that only salary sacrifice contributions work.
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