Tax relief on contributions if no earned income

rdtrdt

Could someone confirm the following?

For a person whose income arises solely from savings interest income, the maximum pension contribution upon which tax relief can be obtained is £2880 (which grosses up to £3600 after tax relief top-up).

ie. only earned income is considered when determining tax relief on pension contributions - interest income plays no part, and therefore someone in this position is treated the same as a non-taxpayer, and thus the £2880 (£3600 grossed up) contributions limit applies.

Is this correct?

This is the position I'm in. I've made maximum use of stocks & shares ISA limits over the years, but would like to maximise my use of tax efficient savings vehicles. While £3600 is a pretty modest amount, it would up my tax-efficient annual savings by 1/3, which adds up over the years, so long as I coudl do it in a cost-effective manner.

Any input appreciated. Thanks.

CLAPTON

yes anyone can put 2880 pa into a pension (earned, saved, interest, divi, gifted etc )

Paul_Herring

CLAPTON wrote: »

yes anyone can put 2880 pa into a pension (earned, saved, interest, divi, gifted etc )

With the mention of 'earned income' I got the impression the question was more along the lines of "If you earn more than £3,600 from savings interest, can you contribute more than £3,600 to a pension [and get 20% tax relief?]" (bearing in mind that income tax is only charged at 10% for the first £2,560 after the tax free allowance.)

i.e. does interest count as 'earned income' for the purposes of the limits on pension contributions?

Had a rummage around t'interweb earlier, but I couldn't find a definitive answer.

SippTechie

The £3,600 limit is available to almost anyone who doesn't have any earnings.

The only other conditions that haven't been mentioned relate to UK residence and age.

There are some wrinkles but, to keep it simple, I'll just confirm that provided you are under 75 and resident in the UK, you can get tax relief on the contribution (gross) of £3,600.

If either of those don't apply to you I can explain further.

dunstonh

earned income has to be job earned. Not savings.

e.g. earned income is £2000 and savings interest is £5000. Maximum pension contribution allowed (to get tax relief) is £3600 gross.

westy22

earned income has to be job earned. Not savings.

Am I right in thinking that pension income is also not 'earned income' for tax relief purposes, even though it is taxed at source?

rdtrdt

Paul_Herring and dunstonh got to the nub of what I was asking.

I'd read somewhere previously that only earned (not savings interest) income counted for tax relief purposes, but couldn't find anything y'day on the Revenue site when scanning it quickly.

Thanks for confirming what I thought: £3600 grossed is my limit.