Tax Rate-Lump Sum Pension Contribution to avoid HRT?

philng

I have estimated total earnings this year of around £47500 and tax code of 543L. How much would I need to place in to my pension as a lump sum to avoid Higher Rate tax on my income & will I then get 40% relief on this payment?

Thanks.

jem16

You need to pay in £7065 and yes you would receive 40% tax relief on this.

Remember though that you need to add in any savings interest or dividend payments to the total income.

kidmugsy

@jem, just to be sure: am I right to assume that one can also avoid the "age allowance trap" by making a pension contribution?

jem16

kidmugsy wrote: »

@jem, just to be sure: am I right to assume that one can also avoid the "age allowance trap" by making a pension contribution?

I do not know for sure.

However my first instinct would be to say no as the reduction in the higher personal allowance is based on total income as opposed to total taxable income.

kidmugsy

jem16 wrote: »

I do not know for sure.

However my first instinct would be to say no as the reduction in the higher personal allowance is based on total income as opposed to total taxable income.

Thanks: I'll see whether anyone of the tax board knows for sure.