NHS Scotland Pension - Should I use AVCs to take my income below the 42% tax bracket

jamesd

Just to repeat, it's not better to stay above the tax threshold and you will receive the higher tax relief above that.

If you need some of the money, say just 25% tax free lump sum, the answer might vary a bit depending on how the scheme lets you use AVCs.

However, there's a bigger and potentially far more lucrative issue. Do you have lots of savings and investments outside pensions? You can potentially move those into a pension to get the pension tax relief and as you're older than 55 & the money is accessible, not locked away.

TARDIS

I think you’ll need to get your “adjusted net income” (not just pay minus NHS pension contributions) below the threshold so that you get £1k tax free savings and avoid higher rate income tax.

Adjusted net income includes all savings interest outside an ISA (even that taxed at 0%), minus allowable expenses such as gift aid donations (x1.25 to gross up) and professional subscriptions.