Loan interest received and Pesonal Savings Question following pension tax relief

Snarky

Hi there

I am new here so please be gentle.

1. I have £4,000 of income from a single personal loan to a friend - I declare this as being box 2 of the SA100 as savings received... and get taxed - Is that the right place to put it?

2. I am considering using an extra pension contribution to get my total income including the above to under the high rate threshold so I end up as a 20% tax payer and get relief etc.. Can I then expect £1,000 PSA or will the relief be ignored and I get just £500 like I was a high rate tax payer?

Thanks

G

uknick

Part 2 to your question -

The PSA rate is dependent on your total taxable income. This is the figure after deducting any legitimate pension payments.

So, yes if your pension payments bring your total taxable income to below the HR threshold you will get the £1k PSA.

xylophone

I have £4,000 of income from a single personal loan to a friend

Do you mean that your friend is paying you £4000 a year in interest on a loan that you made to him?

Or do you mean that he is paying you £4000 a year, part of which is repayment of capital and part of which is interest?

Or was the loan interest free and he is repaying you at the rate of £4000 a year?