Private pension

amibovvered

I'm nearly 58, currently living off savings until my occupational pension is paid at 60. Is it worth me starting a private pension?

If so, once I start getting my pension can I continue to pay into a private pension to reduce the tax paid on my occupational pension, or is that not allowed?

xylophone

If you have no relevant earnings you are restricted as to how much you can contribute to a pension and receive tax relief - see

http://www.hl.co.uk/pensions/sipp/how-much-can-i-invest

This can continue until you are 75.

If you are a higher rate tax payer, even if you don't have any relevant earnings and make a (net) pension contribution of £2,880 (grossed up to £3,600), then you're entitled to higher-rate (and additional-rate where relevant) tax relief, which is achieved by extending the basic-rate band.

You would have to claim this through HMRC.

Linton

You only get tax relief on "earnings". Pension income isnt earnings.

amibovvered

Linton wrote: »

You only get tax relief on "earnings". Pension income isnt earnings.

Yes, I had a feeling that might be the case, hence why I asked if it was 'allowed' - thanks.

Xylophone, my occupational pension will only be around £16,000 p.a. so even once my state pension is payable at 66 I will never be a higher rate tax payer, thanks.

jamesd

Even with no earned income you can pay £2880 net, £3600 gross into a pension. The difference between the two is the basic rate income tax relief.

If the risk level is suitable you can use VCT buying to reduce your income tax bill.