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Can DW claim tax-free interest?
Comments
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What you say makes sense Zagfles, I mustn't have been thinking straight early this morning.
By sticking £16k of cash into a personal pension it gets grossed up to £20k, getting £4k of value 'free' from HMRC, which is greater than the tax and NI payable on a £20k salary, leaving cash in the hand as well as the full £20k in the pension.
If the pension pot is relatively small even after investment growth, so can all be drawn back out without paying tax in retirement, AND the low salary-net-of-pp-contribution qualifies for free student grant money, it seems like a win-win.
But you can't get all the free tax relief (on tax you hadn't paid anyway) as a pension contribution AND also get your interest tax free, I don't think.0
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