VCT and Pension Contribs. Tax Relief Double Dipping

Secret2ndAccount

I think I know the answer to this, but I would welcome confirmation from somebody who knows for sure.

This year, I will earn 30k. I have enough savings to live off, so I will contribute 24k to my SIPP, receiving a 6k top up from the Taxman.

On 30k income, I would pay 3500 in tax. Can I now invest 11500 in a VCT, and receive tax relief of 3450?

Total tax paid, £50.  Total relief £9450.   I can't see anything in the rules that prevents me from doing this.

Thanks

bigadaj

To receive tax relief you must have paid the tax, so having reclaimed it as part of the pension contribution I wouldn't have thought it was available for the VCT relief.

Marcon

bigadaj said:

To receive tax relief you must have paid the tax, so having reclaimed it as part of the pension contribution I wouldn't have thought it was available for the VCT relief.

Not a tax reclaim on a relief at source pension such as a SIPP, where the pension provider claims basic rate tax/adds this to the pension pot.
With VCTs, tax relief is provided in the form of a tax credit to set against your overall income tax liability in the tax year, so if OP pays tax of £3,500, they can receive tax relief up to that amount (assuming their VCT investment is high enough). Always worth checking with the VCT provider - should be information in the accompanying literature, but if not, give them a call to be quite sure. With the world on its head at the moment...
Works with EIS, too. Clear worked example here: https://www.syndicateroom.com/investing/pension-tax-relief

bigadaj

So it's your secret second account then?

Secret2ndAccount

bigadaj said:

So it's your secret second account then?

Shhhh!

Marcon

Secret2ndAccount said:

bigadaj said:

So it's your secret second account then?

Shhhh!

Maybe call it something else!!