HMRC is TAXING certain Pension CONTRIBUTIONS

kermchem

poseidon1 said:

mc50 said:

Now that savings interest and property rental income is now going to be a separate tax, whilst I am sure they will be added up to determine the higher rate band ... are we likely to see HMRC refusing HR pension contributions on these sources of income like CGT?

A curious question since neither savings interest or property rental have ever been 'earnings' for the purpose of qualifying pension contributions. 

So to this extent HMRC will continue denying any relief ( BR or HR) for pension contributions purporting to be supported from those income sources.

Indeed, my understanding of what was said in the Budget speech is that "earned" income is subject to 2% NI (above the higher threshold) and then to 20%, 40% or 45% income tax, the chancellor wishes in future to make "unearned" income (from BTL, savings, etc) subject to 22%, 42% or 47% income tax.

And, yes, you cannot contributed "unearned" income to a pension and obtain tax-relief.

Notepad_Phil

kermchem said:

poseidon1 said:

mc50 said:

Now that savings interest and property rental income is now going to be a separate tax, whilst I am sure they will be added up to determine the higher rate band ... are we likely to see HMRC refusing HR pension contributions on these sources of income like CGT?

A curious question since neither savings interest or property rental have ever been 'earnings' for the purpose of qualifying pension contributions. 

So to this extent HMRC will continue denying any relief ( BR or HR) for pension contributions purporting to be supported from those income sources.

Indeed, my understanding of what was said in the Budget speech is that "earned" income is subject to 2% NI (above the higher threshold) and then to 20%, 40% or 45% income tax, the chancellor wishes in future to make "unearned" income (from BTL, savings, etc) subject to 22%, 42% or 47% income tax.

And, yes, you cannot contributed "unearned" income to a pension and obtain tax-relief.

Unless of course you are making use of the £2880 route allowed to people who have little or no earnings.