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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4199
Experience:  FCCA FCMA CGMA ACIS
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I am due to leave my employment at the end of June having earned

Customer Question

I am due to leave my employment at the end of June having earned £25k so far by then this tax year and between myself and my employer have put approx £6k into my pension so far this year. My employer is willing to put a lump sum into my pension. Am I right in thinking that you cannot put more into your pension than you have 'earned' during the tax year (i.e. the £25k) without incurring tax? I am aware of the £40k limit on contributions and the carry over rules.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.

Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.

You are correct in your surmise. Pension contributions by you and your employer aggregated may not exceed 100% of emoluments so that leaves 19K of contributions availabkle should your employer so proceed. As you are aware of the limits and the carry over rules, I will not comment thereon. These can be quite valuable, however in reducing tax exposure.

Redundancy and severance pay do attract other reliefs as the first 30K is exempt from tax altogether. In this case it does not really alter the price of cheese, as my old boss was wont to say, however it is something to bear in mind and tuck away for future reference.

I do hope that my response has been of assistance to you.

bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.
Thank you for your support.