Tac Relief on Prize

willomena12_2

Hi All,
I recently won a cash prize in a free to enter competition. I want to put it into my SIPP, but wonder will it be eligible for tax relief being that its not money I already paid tax on through earnings? I'm a 20% rate tax payer. Thanks

AnotherJoe

You are fine.
It doesn't matter what the "source" is the only two rules are, as long as you haven't exceeded your annual allowance, or you haven't received and then are trying to pay in more than £7,500 in tax free withdrawal from a pension.

(Look at it another way, whose to say that it's the prize money you are paying in? I'd say it's some of your earned money and you are using the prize money to buy your dinners and pay the mortgage or rent. )

willomena12_2

Great, thank you!

Aegis

Just remember that the maximum amount of contribution upon which you can receive tax relief is the total amount of gross taxable employment and self-employment earnings in a year. In other words, if you earn £20,000 gross (after pre-tax deductions), you can pay a total of £20,000 gross into your pension from all sources, including any third-party contributions.

If you have earnings of £20,000 and won a prize of £40,000, you cannot pay in the full amount and receive tax relief, even if you have available annual allowance.

Dox

Aegis wrote: »

If you have earnings of £20,000 and won a prize of £40,000, you cannot pay in the full amount and receive tax relief, even if you have available annual allowance.

...unless you pay in your 'prize' money over more than one tax year.

Aegis

Dox wrote: »

...unless you pay in your 'prize' money over more than one tax year.

Spot on, yes.