How To Get 60 pc Pension Tax Relief

Published / Last Updated on 09/07/2019

Higher earners may secure up to 60% tax relief when paying into a pension plan. Take a look at the example:

Dave has income of £125,000 in 2019/20.

NO PENSION CONTRIBUTION - HIS NET INCOME FIGURES:

Income: £125,000

Personal allowance: £0

National Insurance: £6,464

Tax: £42,000

Net personal pension contribution: £0

Net income: £76,036

Effective tax relief: 0%

________________________________________________________

£25,000 CONTRIBUTION - HIS NET INCOME FIGURES:

Income: £125,000

Personal allowance: £12,500

National Insurance: £6,464

Tax: £32,500

Net personal pension contribution £20,000  (£25,000 gross)

Net income: £66,036

Effective tax relief: 60%

Dave made a net (relief at source) pension contribution of £20,000 receiving £5,000 pension tax relief at source.  His net income fell by £10,000 in return for a pension contribution of £25,000 - an effective rate of tax relief of 60%. Source: www.Techlink.co.uk


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