Relevant income (eligible for pension tax relief)

chucknorris

I've recently dropped down to working one day per week so I cannot invest as much as I would like into my pension, because my employment income is much lower. However I noticed that the following is also classed as 'relevant income' and is also therefore eligible for pension tax relief:

Remuneration paid in the form of units in an authorised unit trust provided it is treated, on receipt, as a taxable emolument of the individual

Does anyone know exactly what these are, and if there are any products available that fully fit the above criteria? Is it really as simple as investing in some sort of unit trust? That seems to good to be true (so it probably isn't), but I thought that it was worth asking the question anyway.

Linton

It does say "remuneration" and "emolument" which surely means payment for working. I have no idea why one would want UT units instead of cash. Perhaps an incentive for fund managers?

chucknorris

Linton wrote: »

It does say "remuneration" and "emolument" which surely means payment for working. I have no idea why one would want UT units instead of cash. Perhaps an incentive for fund managers?

I have spent quite a bit of time trying to find out exactly what it means, and I've got nowhere. I would like to buy more additional pension in the teachers pension scheme than my employment income allows, I might consider working more in 2020 when I join the 2015 scheme, but I'd rather avoid that is possible, by finding another way.

xylophone

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100#qualifying

pay in the form of units in an authorised unit trust if taxed on the person receiving it

The employer pays a salary ( so relevant earnings) in whole or in part in the form of units in a UT and this is taxed as employment income/benefit in kind?

You could always ring/write to HMRC for exact details.

Malthusian

If you mean "can I buy £1,000 worth of units in a unit trust and then get tax relief on an extra £1,000" then no you can't. It's not remuneration or a taxable emolument.

If your employer paid you in unit trust units you could claim tax relief against that, but if they were paying you in units it would be in lieu of salary. So it makes no difference to how much pension tax relief you can get.

chucknorris

Malthusian wrote: »

If you mean "can I buy £1,000 worth of units in a unit trust and then get tax relief on an extra £1,000" then no you can't. It's not remuneration or a taxable emolument.

If your employer paid you in unit trust units you could claim tax relief against that, but if they were paying you in units it would be in lieu of salary. So it makes no difference to how much pension tax relief you can get.

Thanks, that makes sense (although I do wonder why an employer would pay with unit trusts), but obviously I didn't think that, I thought that somehow the income from unit trusts if taken in a particular way, might have been counted as relevant income.