How To Get 60 pc Pension Tax Relief
Published / Last Updated on 08/07/2019
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
