[disney332]

Originally Posted by tspill

My way is not spin. It is the way every financial document on the subject presents it.
You NEVER uplift on the gross amount - ALWAYS the net amount. The net amount is the actual money YOU put in and on which the uplift (or top up) is calculated.
The gross amount that you end up with is the UPLIFTED amount.

With a higher tax payer, technically you dont claim anything. What actually happens when. you complete your self assessment is that this is added to your zero band allowance. It has the effect that it looks like "claiming" tax back but is very subtly different as it in effect allows you to get tax back when you never paid tax.

For example, most of us have a tax free allowance of £12500.
Lets say a person earns exactly £12000 (and pays no tax).
That person can pay £12000 into a pension and the government will add £3000 (25% uplift/topup). You can only pay a maximum of your salary into a pension in a year (ignoring the £40K limit).
But even with zero earnings you can put this £2880 and get that grossed up as was being discussed above.

Money for nothing no matter what way you look at it. I have spend years trying to use this to my advantage and it allowed me to retire early. To get the best out of this, tax planning is the most important aspect.
I have done as much as I can do as I have stopped work (earning) other than the £2880 which I will start next financial year.
Now working on my OH's pension. She is planning to work for this and two more tax years and putting as much into pension as possible. Then spend three years drawing down on that. I have done the calculations that ensure she can get nearly every penny out tax free (25% TFLS plus annual allowances). All before taking her work pension.

See more...

Never looked at it this way...

If we ever meet on Main Street, lets have a coffee at Starbucks with calculators in hand !

Disney332