How do I calculate a putative 30% pension tax relief

I know that we're not meant to be speculating on future policy in this sub, but it is prudent to do some forward planning. As such, I was trying to work out how to calculate what a tax relief cap of 30% would look like to a higher rate taxpayer.

For example, taking an indicative salary of £80,000, and an employee contribution of 10% - would the impact be a 25% hit to the pension, or a 10% hit?

What about for defined benefit contributions (e.g. teachers or local government) - would the impact be 10% additional tax on the pension contribution, or 25% additional tax (as it would mean losing a quarter of your tax benefit).

Are there any calculators online that could help?

Posted Jul 26, 2024, 8:59 PM UTC

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