Investing in a Private Pension while "Retired"

Pooh_Bear

I have just "retired" at age 60.

In the current tax year 14/15, I expect to receive ~£14k gross from pensions.

I additionally expect to earn ~£10k gross from self-employed consultancy work.

I presume I will have to complete a self-assessment return for this tax year and pay income tax and NI on the income from the consultancy work.

Is there any reason I cannot put the net income from the consultancy into a private pension plan, to get the tax back?

Thanks,

Larry

greenglide

You can, indeed. Do you trade as a limited company? The limited company can pay on your behalf and save NI contributions as well if appropriate.

Your_Hero

You can do this. But do take care, because we are talking about your "gross" income from consultancy. You need to look at your net profit (i.e. after your expenses, overheads have been deducted, which I presume will make your income quite low) and this will be your relevant earnings for the year (i.e. the max amount you can contribute or £3,600 whichever is higher to attract tax relief). Your pension income of £14k does not count towards this.

IF you are a LTD company, then your company can make these contributions and is a deductible expense.

Pooh_Bear

Your_Hero wrote: »

You can do this. But do take care, because we are talking about your "gross" income from consultancy. You need to look at your net profit (i.e. after your expenses, overheads have been deducted, which I presume will make your income quite low) and this will be your relevant earnings for the year (i.e. the max amount you can contribute or £3,600 whichever is higher to attract tax relief). Your pension income of £14k does not count towards this.

IF you are a LTD company, then your company can make these contributions and is a deductible expense.

It'll be ~£10k in fees and commissions before tax/NI; I will be paid expenses in addition to the £10k.

System

Your_Hero wrote: »

IF you are a LTD company, then your company can make these contributions and is a deductible expense.

Actually employer contributions are not limited by annual salary. The payment simply has to be a legitimate business expense. It can be the maximum annual allowance plus 3 years carry forward paid as a lump sum, if justifiable for the business.