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Posted Fri, 15 Mar 2024 15:59:42 GMT by Felix
Hi, I am trying to calculate how much pension contribution to make between now and the end of the financial year 23/24 to avoid losing my personal allowance. Can you please assist with the below calculation? If I were to earn - £110,000 profit from self-employment which of the following would be correct? 1. Paying £10,000 pension contribution for the year lowers my taxable profit to £100,000. Or 2. Paying £6,000 pension contribution lowers my taxable income to £100,000 (Because of 40% tax relief on pension contributions) Also, if the automatic tax relief at source were to be applied after the 23/24 tax year, would that be accounted for in the 23/24 self-assessment? If I make a pension contribution today, the automatic 20% tax relief won't be applied to my pension until May 24. In this scenario, would I receive just the additional 20% pension tax relief for the higher rate tax, and not the 20% from the basic that is automatically applied at source (in May 24)? Am I understanding that correctly? Thank you
Posted Thu, 21 Mar 2024 12:08:05 GMT by HMRC Admin 25
Hi Felix,
The deduction from your income would be the net pension contribution grossed up.
For example if you paid £6000 and based in England the calculation woud be £6000 x100/80 =  £7500.
The date of payment in the case of contribution under net pay arrangements is the date is the date of deuction from the employee's pay. 
Thank you. 
 

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