Earning into the 40% tax- more pensions contributions?

[ReturnToRiding]

My wages have crept up to about £55k. Should I be doing something to make those earning more beneficial like putting more into pension or something to save on the tax?
im clueless

It would be tax efficient to do so, as you will get 40% tax relief on the amount over £50k you put in.

So - if you don’t need the cash now, make sure you’re putting it in. Ask your employer if they can do it salary sacrifice - as they may give you the employers NI savings then too.

If you can afford it then paying some extra pension contributions is very tax-efficient.

It depends what your trying to achieve?

If the aim is to reduce tax now then increase pension contributions,

If the aim is something else...retire early, become debt free, maximise ROI then you need to consider all of your fiances e.g.

What is your current pension set up? Relief at source/ salary sacrifice etc?
what percentage fo you currently put in?
How old are you? Any BIK? Any additional salary sacrifice in place? Do you have student loan?
How much is current pension?
are maxing employer contribution matching if in place?
Do you have any debts with high interest rates?
Do you have a mortgage? What's the balance and interest rate?
Any savings?

Depending on your aim the answers to all the above and probably more would need to be considered before anyone could advise

How can you tell if you are salary sacrifice or relief at source please?

@Notsuchafattynow easiest way if you arent familar with the structure or entries on your payslip is to ask your payroll department. Having said that you should be able to tell relatively easy from your payslip, the wording and structure of each payslip is different, but usually

salary sacrifice pension contributions will be grouped with the gross or basic number / section on your payslip.

relief at source will have a pension line after the pay line possibly in the deductions section which will include tax NI student loan etc , the pension deduction would be included with these items as it is being accounted for on your full salary

Added an example with distinct sections highlighting placement on payslip

Ps might steal your user name or at least pay tribute Notsuchafattynow2?....still working on it though 😁

How much pension are you paying at the moment as that may drop your salary to below the threshold. Taken from google:

If you earn £55,000, some falls into the 40% band. If you contribute £5,000 gross to a pension, your taxable income effectively drops, potentially moving that £5,000 (and more) out of the 40% band and into the 20% band or personal allowance, saving you £2,000 in tax (£5,000 x 40%) on top of the basic 20% relief.

if you are looking to save tax then the most efficient way is to ensure your pension contributions (potentially by paying more into your pension) are high enough to keep your income below the 40% threshold.

It is a good way to build your pension. There’s also no guarantee the 40% relief will last forever so worth making use of it while it’s definitely there.

The other thing you can consider is buying annual leave or taking unpaid leave. The marginal cost doesn’t feel as high as you’re losing the 40% on that portion of income anyway. Or you just accept the tax and take the pay rise.

If you can afford it, do it. I did this prior to retirement.