Higher rate tax relief on pension contributions

BoGoF

Have to say i thought it would be obvious that you can't get higher tax relief on an amount you didn't pay higher rate tax on.

Marcon

BoGoF wrote: »

Have to say i thought it would be obvious that you can't get higher tax relief on an amount you didn't pay higher rate tax on.

I have considerable sympathy for OP. Out of interest I did a bit of googling and one website after another simply says that higher rate taxpayers etc etc, without the caveat that higher rate tax relief can only be claimed where you have actually paid higher rate tax. Like so many things, it is 'obvious' when you know, but not nearly so obvious when you don't - and everything you read stop short of explaining it.

Peter314

Marcon wrote: »

I have considerable sympathy for OP. Out of interest I did a bit of googling and one website after another simply says that higher rate taxpayers etc etc, without the caveat that higher rate tax relief can only be claimed where you have actually paid higher rate tax. Like so many things, it is 'obvious' when you know, but not nearly so obvious when you don't - and everything you read stop short of explaining it.

Agree it's certainly not obvious, given that basic rate tax relief is given even where income is within the personal allowance so that no income tax was paid. It's not obvious that some similar arrangement won't apply to higher rate tax relief...

BoGoF

Surely logic dictates that once any higher rate liability has been repaid then you are no longera higher rate taxpayer......therefore no further relief due.

Otherwise (as was ssid earlier) you could be £1 into the higher rate bracket and receive higher rate relief on, for example, £40k worthof contributions. Higher rate relief would have to be scrapped if that were the case.

sandsy

You get tax relief at the same rate as you would have paid, if you took the amount contributed as cash.

Peter314

sandsy wrote: »

You get tax relief at the same rate as you would have paid, if you took the amount contributed as cash.

Not necessarily. If you earn up to £12,500 you get 20% tax relief despite being within the personal allowance and paying no income tax.

It's not evident how pension contributions will be treated; it's somewhat arbitrary and determined by the whim of successive Chancellors of the Exchequer...