Work Place Pension contributions

GraveDisorder

Hi all
I am a 40% tax payer who contributes 9% to a work place pension. The contributions take me in to the 20% tax band. Will this change the tax I pay on savings interest - i.e., 20% not 40% ?
Thanks. 

Dazed_and_C0nfused

GraveDisorder said:

Hi all
I am a 40% tax payer who contributes 9% to a work place pension. The contributions take me in to the 20% tax band. Will this change the tax I pay on savings interest - i.e., 20% not 40% ?
Thanks. 

Not necessarily, it depends on how much interest (or other taxable income) you receive.

You might be a basic rate payer on your earnings alone but the interest could take you back into the higher rate band.

If so you would get £500 interest taxed at 0% and the rest taxed at 40%.

If you are a basic rate payer with all taxable income factored in the first £1,000 of interest is taxed at 0%.