40% Threshold

sorcerer

Just curious if somebody is just over the 40% tax bracket, would any money they put in a SIPP be at 40% tax relief.

For example if I earned £44,000 a year, and then i put £20,000 in a SIPP in that tax year, would i get 40% relief on it.

jem16

sorcerer wrote: »

For example if I earned £44,000 a year, and then i put £20,000 in a SIPP in that tax year, would i get 40% relief on it.

No you would only get 40% tax relief on £1525 with the rest at 20%.

basically you only get 40% tax relief on the amount you are in the 40% tax bracket by.

Al_Ross

What if someone earned from their employment below £42575,but received savings interest that put them over £42475 ?

jem16

Al_Ross wrote: »

What if someone earned from their employment below £42575,but received savings interest that put them over £42475 ?

Then you will have to pay the extra tax on the savings interest. if you are talking about tax relief on pensions you will be able to claim the 40% tax relief.

xylophone

http://www.direct.gov.uk/en/moneytaxandbenefits/taxes/taxonsavingsandinvestments/dg_4015739
http://www.hmrc.gov.uk/individuals/savings-income.htm