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Posted Wed, 07 Dec 2022 22:11:30 GMT by Massmassy
If I earn over 101k in total as my income from employment and contribute £2000 into SIPP would the £2000 be subtracted from 101k and then that amount be subtracted from full personal allowance of £12,570? Or is it simply a case that SIPP is only added to 20% tax rate band and should not be subtracted from gross income of 101k?
Posted Fri, 09 Dec 2022 14:21:32 GMT by HMRC Admin 32

The payment would extend the 20% rate band for you and should not be deducted from your gross income.

Thank you.
Posted Fri, 09 Dec 2022 16:06:39 GMT by Massmassy
Thank you for your kind help. How does extending the 20% band link in with not reducing the £12,570 personal allowance threshold?
Posted Tue, 13 Dec 2022 10:41:30 GMT by HMRC Admin 17

Please refer to guidance at:

Income Tax rates and Personal Allowances  .

Thank you.
Posted Wed, 14 Dec 2022 21:31:41 GMT by Massmassy
Hi I have referred to that guidance but I am still not clear. Does basic rate tax band increase the personal allowance limit? Would appreciate your help in understanding this
Posted Tue, 20 Dec 2022 10:40:32 GMT by HMRC Admin 2

The increasing of the basic rate band does not increase the personal allowance.

It just means more of your tax is calculated at 20% rather than the higher rate.

Thank you.
Posted Tue, 20 Dec 2022 14:44:33 GMT by Massmassy
Hi sorry I don't think my question makes sense. If my income is over 100k and I make a SIPP pension contribution, according to your guidance on website, my adjusted net income is reduced. This would then surely give me full personal allowance as income would be NOT over 100k? You have mentioned increasing 20% basic tax band with SIPP contribution which I understand but I want to understand personal allowance side of things
Posted Thu, 22 Dec 2022 10:40:29 GMT by HMRC Admin 32

You can find guidance on adjusted net income below, it includes the 4 steps to work out your net income.

Personal Allowances: adjusted net income

If your adjusted net income is below £100k, then you will be entitled to full personal allowance. Where you exceed £100k, for every £2 over, your personal allowance is reduced by £1.

Thank you.
Posted Thu, 22 Dec 2022 12:04:15 GMT by Massmassy
Thank you. So if my total earning was 104k and I put 4k into SIPP adjusted net income is 100k. Would I pay tax on 100k or 104k.
Posted Fri, 23 Dec 2022 09:23:27 GMT by HMRC Admin 19

Your taxable income is still £104 thousand.

Thank you.

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