Extra Contributions outside of Group Money Purchase Scheme

ffacoffipawb

I am paying the max 15% into our CIMPS scheme.

After 6 April I can pay more.

However what I want to do is maximise my 40% relief, which would suggest a contribution 20%-25% next year (true amount not known until any bonus and overtime allowed for).

So what I wish to do is continue the 15% but when it comes to March next year pay the required amount into a personal pension (which will be allowable by then) to maximise my 40% tax relief.

I could work out what I need to pay as a lump sum nearer the end of the tax year (to reduce taxable income to basic rate, or near enough), but what proof do the Inland Revenue require to show that I paid this extra money? Surely a mere mention on a tax return will not be sufficient?

Thanks

dunstonh

but what proof do the Inland Revenue require to show that I paid this extra money? Surely a mere mention on a tax return will not be sufficient?

It is all that is required at the point of filling in the tax return. If you get investigated, the policy document should confirm the contribution or a contribution certificate from the provider would suffice. However, dont worry about that. Just make sure the entry in your tax return is right.

ffacoffipawb

How would this work then (numbers made up)..........

(1) Salary (after tax allowances) = £40,000
(2) Higher rate threshold = £35,000

===> higher rate taxpayer.

Assume taxable interest income = £10,000 gross (£8,000 net).

There are no pension contributions being paid, so pay an extra £2000 on tax return on this interest.

Now instead of this scenario, assume pension contribution of £10000 gross via PAYE.

How would this work out for tax:

(a) Net of allowances and pensions pay = £30,000 (£10,000 gross pension contribution deducted by PAYE). Next £5,000 gross interest has no liability to HRT as still within basic band. Remaining £5000 has an additional tax liability of £1000 so an extra £1000 tax to pay via tax return.

OR

(b) Can this extra £1000 tax due be reduced to nil to gain higher rate tax relief on the £5000 contribution to the pension that has already received only basic relief. So additional tax due = £0 via tax return.

What I am trying to ask (badly), is : "is the tax return additional tax due nil or £1000 in this scenario?"