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Pete95

Pensions Contributions Question - 40% Or 22% Tax Relief?

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Im possibly starting a new job with a salary of about 30k. I need to earn over 31400 to be a 40% rate tax payer, so obviously my pension contributions will only have 22% tax relief BUT....

Im likely to have other income so my annual earnings will total 35k+ putting me into the higher tax band.

But will my pensions contributions for my main job get 40% tax relief or 22%?

help!!

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Your income for taxation purposes is a combination of everything that you 'earn' in a year. For example, someone whose job salary is under the 40% threshold might have savings which bring interest that pushes him/her up to the 40% tax band.

However, only your salary income, not interest from savings, is allowable towards a pension. Your salary, however, might be a combination of a 9 to 5 job plus income from a house you let out or an investment in a shop.

Basically, the Government wins.

Don't forget, only that which is over the 40% threshold is actually taxed at 40%

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Im possibly starting a new job with a salary of about 30k. I need to earn over 31400 to be a 40% rate tax payer, so obviously my pension contributions will only have 22% tax relief BUT....

Im likely to have other income so my annual earnings will total 35k+ putting me into the higher tax band.

But will my pensions contributions for my main job get 40% tax relief or 22%?

help!!

you wont hit the 40% band until your income is over 37295 not 31400. This is assuming you just get the standard tax free personal allowance of 4895.

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Im possibly starting a new job with a salary of about 30k. I need to earn over 31400 to be a 40% rate tax payer, so obviously my pension contributions will only have 22% tax relief BUT....

Im likely to have other income so my annual earnings will total 35k+ putting me into the higher tax band.

But will my pensions contributions for my main job get 40% tax relief or 22%?

help!!

As far as I am aware, the thresholds are on top of your annual allowance. This would take it to something like 36k before hitting 40% tax.

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Im possibly starting a new job with a salary of about 30k. I need to earn over 31400 to be a 40% rate tax payer, so obviously my pension contributions will only have 22% tax relief BUT....

Im likely to have other income so my annual earnings will total 35k+ putting me into the higher tax band.

But will my pensions contributions for my main job get 40% tax relief or 22%?

help!!

Pension contributions are always paid net of basic rate tax relief. You could only obtain 40% tax relief through self-assessment anyway and it would appear unless you have a lot of taxable benefits (company car PMI etc) that you are some distance from being a higher rate taxpayer.

As correctly written elsewhere its £31400 plus your personal allowance (£4985 off the top of my head) less any taxable benefits before you pay HRT and so can get 40% tax relief on pension contributions.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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