Pensions lump sum

[tspill]

Originally Posted by disney332

This is fun...

£3,600 is the gross contribution

£2,800 is the net contribution after 20% tax relief on the gross.

If pension contributions interact with income tax, where does 25% tax come from? 25% is not a UK rate of income tax.

Disney332

Edit: likewise, if i want to make a £30,000 gross contribution, i give my advisor a cheque for £24,000 (24 +80 x 100 = 30)

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OK, In your example you pay in 24,000 (your actual money). The pension fund adds 6000 (your uplift from 24000). The total is 30000.
The uplift of 6000 onto of your 24000 is 25% (6000/24000).

Gross 100% is the total of net at 80% plus tax at 20%.
20% is 25% of 80% - hence the 25% uplift

See the likes of
pensionbee/pensions-...into-a-pension
Para. 4 - Your pension contributions attract a 25% tax top up from the government. "
Maybe this explains it better than I am doing.