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Adding to Pensions for non tax payers
Comments
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gazza26 said:Albermarle said:The £2880/£3600 is the max you can add for non earners.
People who have earned income above £3600 pa can add their full income to a pension ( gross) regardless of whether they actually pay any tax or not.
So if I put in a lump sum of whatever I have earned over £3600(2880 plus the tax relief) then I am still legally entitled to tax relief on the additional amount?
So for example if you earned £7000 and had already added the £3600 , you could then add another £3400 gross.
So in practice you could add £2720 and £680 tax relief would be added.
What I want to do is pay more into a pension but fully appreciate that I won't get any tax relief, but I can't find one.
There is no point adding to a pension if you do not get tax relief, as the pension is partly taxable on withdrawal.
If you have more funds available above your gross earnings, then it would be better to put them in a Stocks and Shares ISA. Or a LISA if you are under 40.1 -
Based on what has been clarified above, for a non-taxpayer and non-earner would it be better to pay the maximum allowed into the pension because they would get the tax relief, rather than an ISA which shelters it from the withdrawal tax?0
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BigGirlPants said:Based on what has been clarified above, for a non-taxpayer and non-earner would it be better to pay the maximum allowed into the pension because they would get the tax relief, rather than an ISA which shelters it from the withdrawal tax?
For example they put £2880 in, becomes £3600. On withdrawal they still have Personal Allowance so don't pay tax so get the full £3600 out.1
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