Reducing tax via pension when pay rise plus rental income results in higher rate tax

mountaindreams

I am currently pay basic rate tax on my income which comes from work as an employee plus income from a rental property. I pay into a work salary sacrifice pension scheme.

My salary will be increasing and so that I am just under the 40% tax band however the rental income with push me into 40%. I am not sure if I will go over in this tax year but I will next year.

How can I work out whether I will go into 40% tax band this year? Would I just need to calculate my taxble income from my employment then estimate the profit from the rental income? 

If I increase my work pension contributions will the tax relief be at 20% or can I get further tax relief if my rental income is pushing me into the 40% band? If there is additional tax relief would this be calculated via my tax return?

I am trying to work out if it is worth upping my pension contributions now with the current tax rules although am aware that things may well change again after the budget.

Dazed_and_C0nfused

You don't get any pension tax relief on salary sacrifice contributions.  You can never claim anything extra on your tax return for salary sacrifice contributions.

You are agreeing to a reduced salary in return for additional employer contributions.

As you have agreed to a lower salary you will usually avoid paying tax and NI on the amount sacrificed and as a result have used less of your basic rate band.  Leaving more for the rental income.

All you need to do is sacrifice the amount you think is most beneficial when it comes to your overall tax position.  There is nothing more you need to do or can claim.