Income tax rates, defined benefit pension, & should I open a defined contribution one?

[Wiltson]

I’m trying to get my head around how income tax is affected by pension contributions and would appreciate some info as to how it all works.

A) Let’s say my income is 56,000 but I’m paying 6,000 into a defined scheme. My remaining salary of 50k is then only taxed at 20%, I think?

B) Let’s now say my income goes to £60,000 and I pay 8,000 into my DB scheme. So that’s £2,000 that would be taxed at 40%, I think?

C) If I then put that 2,000 into a defined contribution scheme then am I right in thinking that my salary is classed as 50k and so will be taxed at 20%?

And,

D) then something can be claimed back on that 2,000 DC payment and added to the pension fund? 20% or 40% I’m not sure?

E) How does my employer know I’m putting 2,000 in a pension and so should only tax me at 20%?

Thank you!

A) pretty much (well £50k minus your tax free allowance), assuming you aren't in Scotland otherwise use the rates from there

B) again correct in theory. Remember payroll tends to work on a month to month basis so it's likely to be 1/12 of £2000 taxed at 40% each month rather than suddenly just happening in the final month that you breach the £50k limit

C) not exactly like that but once you have paid into a SIPP and claimed the extra relief then you've not paid any higher rate tax in effect

D) the SIPP provider will add basic rate relief to your contribution so your £2000 will be £2500 in the SIPP. You then will claim on Self Assessment and receive a rebate for the higher rate tax relief

E) the employer doesn't know or need to, they just tax you based on what salary they are paying you. The contribution to the SIPP and the HMRC rebate "reimburses" your tax