Tax Relief on Pension

Dave2112

Hi

I'm looking to top up me pension this tax year to equal my pay so as to maximise the tax relief (this is within the annual pension allowance). Does this mean that I get tax relief on the first 10k of salary even though I didn't pay tax on that 10k?

e.g if my salary was 20k. I pay 0% tax on the first 10k and 20% tax on the 2nd 20k = 2k tax in total. I then put 16k into a pension and I receive 20% tax relief added to that of 4k.

Thanks

philwal_2

Your correct you receive 4k tax relief into your plan making total 20k gross

jamesd

Your calculation is correct.

Provided you pay into a pension that operates relief at source you get the tax relief on all of your earned income including the part that is not subject to any income tax.

Dave2112

Tks. Does seem a win-win situation.

philwal_2

There are many benefits of going down the pension route to invest/save your money tax relief being one of them.