AVC payments

Wileycayote2

Hello.                                                                                                                                                     I have a lump sum of £50000 available. I was considering reducing my monthly income to £1000 a month by making £1550 AVC contributions till the 50k was used up. Would this be possible? And be a good idea to recieve effectively tax free income?                                                                               Thanks

Dazed_and_C0nfused

Wileycayote2 said:

Hello.                                                                                                                                                     I have a lump sum of £50000 available. I was considering reducing my monthly income to £1000 a month by making £1550 AVC contributions till the 50k was used up. Would this be possible? And be a good idea to recieve effectively tax free income?                                                                               Thanks

It might be.

Assuming you would be using the "net pay" method and haven't applied for Marriage Allowance then you probably wouldn't be getting any tax relief on a little bit of the contributions.

But it might have other benefits like freeing up the savings starter rate band or mean your spouse could benefit from you applying for Marriage Allowance (you would pay some tax but they would save more).

Not sure exactly mean by receive tax free income as you are referring to effectively spending £50k.

Albermarle

You can contribute to a pension each tax year, as much as you like up to a limit of your earnings in that tax year.
The actual source of the money , or your remaining income are not relevant.

If you want more useful guidance you need to supply more detail.
Is the AVC is linked to a DB/final salary scheme that you also pay into ? Although the term AVC is sometimes used rather loosely.
What are your annual earnings from employment.

Wileycayote2

Hello 
At the moment my gross monthly is around 3500/600 and take-home is around 2500/600.
This includes roughly 200 of both pension and NI.
So if I put 2100 of my wages into Avc,s  and take 1500 out of my 50k to top up my wages, till it's all used up I think I would be adding 600/month. Maybe I've got it all wrong?