Rental Income & Tax Relief on Pension Contributions

quasimodo321

Hi all,

I've read a couple of posts on this but I'm still unclear as to whether a portion of one's rental income can effectively be sheltered from tax by investing it into one's private pension plan and if so how much tax relief could be achieved from this. Can you please consider the following scenario and comment?

John earns a gross annual income of £165k from employment. He currently contributes £10k per annum into a private pension plan on which he gets 50% tax relief.

John will soon start renting out a property he owns on which he expects a net rental income (ie after deductable expenses such as interest on his mortgage payments) of £10k per annum.

If he were to contribute this additional £10k from his property income into his private pension plan, how much tax relief would he be able to get?

Many thanks in advance for your assistance.

middlepuss

quasimodo321 wrote: »

Hi all,

I've read a couple of posts on this but I'm still unclear as to whether a portion of one's rental income can effectively be sheltered from tax by investing it into one's private pension plan and if so how much tax relief could be achieved from this. Can you please consider the following scenario and comment?

John earns a gross annual income of £165k from employment. He currently contributes £10k per annum into a private pension plan on which he gets 50% tax relief.

John will soon start renting out a property he owns on which he expects a net rental income (ie after deductable expenses such as interest on his mortgage payments) of £10k per annum.

If he were to contribute this additional £10k from his property income into his private pension plan, how much tax relief would he be able to get?

Many thanks in advance for your assistance.

The rules don't enshrine the sort of hypothecation your post implies. If you contribute £20K a year your employment income more than covers that and you get relief at your marginal rate - 50%. Where the cash actually comes is neither here nor there.

quasimodo321

middlepuss wrote: »

The rules don't enshrine the sort of hypothecation your post implies. If you contribute £20K a year your employment income more than covers that and you get relief at your marginal rate - 50%. Where the cash actually comes is neither here nor there.

Thanks for the clarification.