Teacher Pension& tax

[sj798]

Please could someone explain this to me in very simple terms. Do I only pay tax on my earnings after pension is removed from gross salary? So if I deduct the pension allowance amount from my gross salary, if the amount left is above the 40% threshold, then I only pay tax on that amount? Thanks in advance for any help for this non mathematician!

Yes, that’s exactly how it works.

I don’t know the answer to this but if you’re on facebook, there’s a great forum that you can ask. It’s called ‘Teacher Pensions - Teacher to Teacher (UK)

So if I have to put a salary figure onto hmrc app, I put the figure minus the pension contribution? Im so sorry if this is a stupid question!

If you are completing your Self Assessment use the figures from your P60 that way you can't go wrong.

It’s your gross salary HMRC want to know.

Hey, I used to work in payroll doing gross to net calculations. Pension deduction isn’t taxable so you remove it from your gross pay along with anything else that isn’t taxable to find your taxable pay.

If you have a detailed payslip which I’m assuming you would. You can double check your calculations using the total payments less pension contributions should get you to the figure of taxable pay. This is assuming no non taxable payments.

Hope this makes sense, feel free to message me if you need any additional information/help.

Employer pension deductions through your salary come off first then whatever is left is taxable income. Private pension payments that you might have through a SIPP etc get 20% tax back but the extra higher rate would need to be claimed through self assessment. Is it a third party that needs the information or just for your own use. Listen to the taxman is a really useful and easy calculator.

Pension deductions comes off first, and then any other tax relief (e.g. union membership), take away the personal allowance (no tax is due on the personal allowance) then whatever remains is taxable.

Yes, by opting back into my pension, I was then eligible for the full amount of child benefit and didn’t need to pay anything back anymore. I didn’t realise this would happen at the time, and would have done it much earlier if I had understood this.