Self employed Pension Contributions

Hal17

Hello, I wonder if anyone can help with the following please?

I am currently taking a sum from my pension that is just below my personal allowance, so currently pay no income tax. I am using capped drawdown so could add up to £40K to my pension under the current tax rules.

I may have the opportunity for some self employed work and was wondering if I say earned £10K, could I put this into my pension and claim the 20% on this full amount?

I would stop my pension income and therefore would still not pay any income tax. I currently pay in the £2880 per year and get the tax relief. But everything I am reading says you have to be a tax payer to get tax relief above the £2880 contribution. Appreciate any help.

xylophone

Re "relevant earnings".

http://www.pruadviser.co.uk/content/knowledge/technical-centre/tax_relief_members_contributions/

xylophone

Re capped drawdown and MPAA

http://www.pruadviser.co.uk/content/knowledge/technical-centre/money_purchase_annual_allowance_mpaa/

But everything I am reading says you have to be a tax payer to get tax relief above the £2880 contribution.

Not so.

Suppose a person's only income this tax year will be his salary of £950 a month from a part time job.

His earnings would be within the PA of £11,500 and he would not be paying income tax.

Nevertheless, he could pay up to £9,120 this tax year into a personal pension (relief at source) and receive tax relief of up to £2,280.

Hal17

Thanks Xylophone, I really appreciate your help. I was getting confused so your explanation was excellent. Thanks again.