Pension - Personal Allowance conundrum
Discussion
What happens if you are low paid eg £15k a year, the Personal Allowance is £12,570 and you purchased say £5k additional pension. But the £5k additional pension attracts tax relief.
Because the difference between the £15k and the personal allowance is only £2430 does that somehow interfere. Eg does only £2430 of the £5k cost of the additional pension attract tax relief of 20%? And the remaining portion not?
So you would pay 80% of the £2430 = £1944, plus the remaining £2570 = £4514
Because the difference between the £15k and the personal allowance is only £2430 does that somehow interfere. Eg does only £2430 of the £5k cost of the additional pension attract tax relief of 20%? And the remaining portion not?
So you would pay 80% of the £2430 = £1944, plus the remaining £2570 = £4514
For a couple of years my wife put her entire nett salary into her SIPP.
At the 20% level you don’t even have to claim the tax relief - the pension provider does it.
ETA: you can also do it if you don’t earn anything at all, but then your contribution is limited to £2880, to which HMRC adds £720.
At the 20% level you don’t even have to claim the tax relief - the pension provider does it.
ETA: you can also do it if you don’t earn anything at all, but then your contribution is limited to £2880, to which HMRC adds £720.
Edited by Sheepshanks on Monday 19th May 07:30
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