Can I claim higher tax relief?

Farcasting

Paul_Herring wrote: »

You can only claim 40% relief on *earned* income that attracted 40% income tax to begin with, and only that portion that did.

On the face of it, this doesnt apply to you so you cant claim it. Rental income doesnt count.

http://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/member-contributions-tax-relief-and-annual-allowance/

wrong.....

https://gyazo.com/b6fa3213db4a5a2584665886c3f8ddf5

NordicNoir

Rental income is NOT considered earned income for the purposes of calculating allowable pension contributions against the £40k annual allowance. See https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100#IDAN30KF section "Earnings that attract tax relief".
This link was posted by Alice previously. It states:

'GOV.UK" wrote:

Earnings that attract tax relief
Section 189(2)-(7) Finance Act 2004

For most people the amount of tax relief they can have on their pension contributions is limited to 100% of their relevant UK earnings that are chargeable to income tax for the tax year (there is another low limit for some - see Annual limits above). If relief is sought within the 100% limit an individual may want to establish how the various payments received as part of earnings have been taxed, to see what counts for this limit. The following earnings are examples of relevant UK earnings.

Relevant UK earnings means any one or more of the following types of income:

employment income, such as: pay, wages, bonus, overtime, or commission - but only if taxable under Section 7(2) Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) - so including:
the part of a redundancy payment above the £30,000 tax exempt threshold in section 403(1) ITEPA 2003. The first £30,000 of the redundancy payment is not classed as employment income so does not count here. But any amount on top of the £30,000 threshold is classed as employment income and so it is also relevant UK earnings. In making this analysis, care is required not to confuse usual wages or pay, pay in lieu of notice or holiday pay, with the redundancy payment when such elements are bundled into a final payment.
benefits in kind which are taxable (applies to employees earning over £8,500, and to directors)
profit related pay (including the part which is not taxable)
Statutory Sick Pay (SSP) and Statutory Maternity Pay (SMP) if paid by the employer and taxable under Section 7(2) ITEPA 2003
Permanent Health Insurance (PHI) payments paid by the employer whilst you are still in employment
pay paid by way of Government Securities
pay in the form of units in an authorised unit trust if taxed on the person receiving it
amounts taken off pay to buy partnership shares in a share incentive plan in line with paragraph 83 of Schedule 8 of Finance Act 2000
income from a trade, profession or vocation that is chargeable under Part 2 Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005)(applies if the activity is conducted individually or as a partner acting personally in a partnership)
income from a UK and/or EEA furnished holiday lettings business, which is chargeable under Part 3 ITTOIA 2005 (applies if the business is conducted individually, or as a partner acting personally in a partnership)
a UK furnished holiday lettings business means a UK property business so far as it consists of the commercial letting of furnished holiday accommodation (Chapter 6 Part 3 ITTOIA 2005).
an EEA furnished holiday lettings business means an overseas property business so far as it consists of the commercial letting of furnished holiday accommodation (Chapter 6 Part 3 ITTOIA 2005) in one or more EEA states.
in either case if there is a letting of accommodation only part of which is holiday accommodation, a just and reasonable apportionment is to be made to determine the amount of the income from that business that is to be counted.
patent income, where the individual alone or jointly devised the invention for which the patent in question is granted, in the following categories:
royalties or other sums paid regarding patent use and charged to tax under section 579 ITTOIA 2005 (intellectual property)
amounts on which tax is payable under section 587 ITTOIA 2005 (sales of patent rights) or section 593 ITTOIA 2005 (death of seller of patent rights), or
amounts on which tax is payable under section 472(5) of the Capital Allowances Act 2001 (balancing charge) or paragraph 100 of schedule 3 to that Act (balancing charges)
Relevant UK earnings are to be treated as not being chargeable to income tax if by virtue of section 2(1) Taxation (International and Other Provisions) Act 2010 (double taxation arrangements), they are not taxable in the United Kingdom. To the extent that they are not chargeable in this way, they will also not count towards the annual limit for relief explained in Annual limits above.

For the avoidance of doubt a pension is not classed as earnings and cannot be included in the definition of relevant UK earnings.

Farcasting

MichelleUK wrote: »

Rental income is NOT considered earned income for the purposes of calculating allowable pension contributions against the £40k annual allowance. See https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100#IDAN30KF section "Earnings that attract tax relief".
This link was posted by Alice previously. It states:

when i actually put the figures the OP mentioned onto the tax return you get the relief so.....

Farcasting

LOOK AT THE TAX CALCULATION, EVERYONE KEEPS QUOTING RANDOM POSTS. I CALLED HMRC ASWELL AND THEY ADVISED ITS CORRECT.

https://gyazo.com/b6fa3213db4a5a2584665886c3f8ddf5

Daniel54

Farcasting wrote: »

LOOK AT THE TAX CALCULATION, EVERYONE KEEPS QUOTING RANDOM POSTS. I CALLED HMRC ASWELL AND THEY ADVISED ITS CORRECT.

https://gyazo.com/b6fa3213db4a5a2584665886c3f8ddf5

You appear to have entered the rental as a holiday let

The rules are clear ,as quoted , that rental income is otherwise excluded as pensionable income

NordicNoir

Farcasting wrote: »

LOOK AT THE TAX CALCULATION, EVERYONE KEEPS QUOTING RANDOM POSTS. I CALLED HMRC ASWELL AND THEY ADVISED ITS CORRECT.

https://gyazo.com/b6fa3213db4a5a2584665886c3f8ddf5

Unfortunately, tax return software does not know everything about the taxpayer. It does not know that the taxpayer is overclaiming for the year, he may in fact be using unused pension allowances from prior tax years. It is only once HMRC have received the return, and do further checks comparing it to their records, that they will then let the taxpayer know that they have not qualified for tax relief on their contributions.

As for HMRC confirming that it was correct when you called them, I can only assume that they either misunderstood or did not have the relevant knowledge.

Linton

The way the tax return software calculates the tax due looks odd. Can you run it withe zero rental income and say £1k rental income? I believe in both cases the tax due should be zero. However if the same method is used as for the £36k rental income I suspect that even if the zero rental income is correct the £1k rental income will show tax due of more than £1k i.e. you lose more in tax than you gain in rent.