If you pay income protection insurance premiums from your own pocket (ie direct debit and nothing to do with employer), in the event that you have to claim, the monthly receipts you get from the insurance company are not taxable under current rules. But if the insurance company offers you a lump sum in lieu of all future monthly payments due to you, then is that lump sum receipt taxable?
If you make the contributions through your employer then they will do this for you. If you make pension contributions out of work then you are better to file a tax return
Thank you Simon! Is pension contribution free of NICs (national insurance)? Can individual get refund of NICs paid on personal pension contribution to SIPP?
@@UK-Property-Tax-Accountants Thank you Simon for your quick reply! Why employer contribution (via PAYE) to workplace pension is free of NICs but personal contribution to SIPP can not get NICs refund? It sounds realy unfair to those people who make contribution to SIPP. I was searching HMRC website, but did not find any rule/information about NICs on pension contribution.
Thanks Simon, great video. As of last month i am now earning £64,000 per year, i pay 7% pension contribution into a standard pension scheme. I am not putting money into any private pension schemes. Do i still need complete self assessment for the relief?
If the pension contribution is a salary sacrifice than you do not need to do a self assessment tax return. If you are not using a salary sacrifice and you will need to do a tax return to get the full tax credit
Thanks for the great content Simon. As a sole company Director could I set up an employer scheme and a SIPP. eg. Sacrifice £2000 and pay that into my employer scheme and pay myself £8788. Thus saving corporation/income tax on £2000 and avoiding any national insurance contributions. Then pay £8788 into my SIPP and receive 20% tax relief on that.
Thanks Simon. Is it possible to restore your tax free personal allowance with pension contribution? Let's say you make 125k which means you have lost 100% of your PA. Could you contribute 25k to your pension and restore 100% of your tax free allowance?
Check the second example here. It says the taxable income is calculated after pension contribution therefore the PA is calculated over the deducted one. Where am I interpreting this wrong?
@@brunolh5808 Pension contributions may be made via salary sacrifice and post-tax contributions. Depending on the type of pension will result in a different tax position.
Superb! Salary Sacrifice rocks! Always my preference!
It is one of the most simple strategies to help people save thanks. But, it is not often used, which is surprising
Amazing thanks
You are very welcome
Thank you Simon!. If I want to top up my pension apart from my employer contribution do I need to do self-assessment tax return with HMRC?
That would be beneficial as you will get a tax credit for the contributions made
If you pay income protection insurance premiums from your own pocket (ie direct debit and nothing to do with employer), in the event that you have to claim, the monthly receipts you get from the insurance company are not taxable under current rules. But if the insurance company offers you a lump sum in lieu of all future monthly payments due to you, then is that lump sum receipt taxable?
does the uk gov contribute to my SSAS?
Short answer here: No.
If you opt out of pension how much tax do you get charged on higher rate?
The full rate of income tax would be applied.
Thanks Simon.
If I decide to change my contributions, do I need to inform HMRC/complete self assessment or is it all adjusted automatically?
If you make the contributions through your employer then they will do this for you. If you make pension contributions out of work then you are better to file a tax return
@@UK-Property-Tax-Accountants Thanks for your prompt reply - subscribed 👍
You are very welcome
Thank you Simon! Is pension contribution free of NICs (national insurance)? Can individual get refund of NICs paid on personal pension contribution to SIPP?
Sadly there is no NIC refunds just income tax.
@@UK-Property-Tax-Accountants Thank you Simon for your quick reply! Why employer contribution (via PAYE) to workplace pension is free of NICs but personal contribution to SIPP can not get NICs refund? It sounds realy unfair to those people who make contribution to SIPP. I was searching HMRC website, but did not find any rule/information about NICs on pension contribution.
Sadly I am just the messenger. It is better to make pension contributions through salary sacrifice
Thanks Simon, great video. As of last month i am now earning £64,000 per year, i pay 7% pension contribution into a standard pension scheme. I am not putting money into any private pension schemes. Do i still need complete self assessment for the relief?
If the pension contribution is a salary sacrifice than you do not need to do a self assessment tax return. If you are not using a salary sacrifice and you will need to do a tax return to get the full tax credit
Thanks for the great content Simon. As a sole company Director could I set up an employer scheme and a SIPP. eg. Sacrifice £2000 and pay that into my employer scheme and pay myself £8788. Thus saving corporation/income tax on £2000 and avoiding any national insurance contributions. Then pay £8788 into my SIPP and receive 20% tax relief on that.
Yes indeed you can take this approach.
Thanks Simon. Is it possible to restore your tax free personal allowance with pension contribution? Let's say you make 125k which means you have lost 100% of your PA. Could you contribute 25k to your pension and restore 100% of your tax free allowance?
Sadly not. Pension contributions extends your basic rate tax band but not personal allowance
Check the second example here. It says the taxable income is calculated after pension contribution therefore the PA is calculated over the deducted one. Where am I interpreting this wrong?
Just add gov dot uk to that link. RUclips is deleting the full link
@@brunolh5808 Pension contributions may be made via salary sacrifice and post-tax contributions. Depending on the type of pension will result in a different tax position.
@@UK-Property-Tax-Accountants fair point. I was assuming the pension contribution was made after taxes. Does that reduce your PA?
What if you earn £60,00 and want to put yourself into the lower tax bracket by making a contribution of £10,000 ?
To really do need to get tax advice as this is very specific to your personal tax affairs. Please do not take advice from anyone on social media