confused about what I can pay into my personal pension

TheSpectator

lastminuteinvestor123 said:

eskbanker said:

lastminuteinvestor123 said:
Yes, I would put it all in an ISA if I could, but as the limit is £20k I'm thinking the remaining £30k might be better off in pension, as at least it will be subject to the 25% tax free lump sum. Have I got that right?

No!  If your £30K is money that's already been taxed (when originally earned), then if you pay it into a pension (without tax relief) and are then taxed on 75% of it on the way out again, you're very much down on the deal....

It wasn't taxed when originally earned (divorce settlement). So am I right in thinking it'll be better for tax to put it in the pension?

Why do you think that after what has already been said. Pension income is taxable. Income from ISA is not. The money could be invested in same fund whether it was pension or S&S ISA so any investment returns would be same.

400ixl

lastminuteinvestor123 said:

eskbanker said:

lastminuteinvestor123 said:
Yes, I would put it all in an ISA if I could, but as the limit is £20k I'm thinking the remaining £30k might be better off in pension, as at least it will be subject to the 25% tax free lump sum. Have I got that right?

No!  If your £30K is money that's already been taxed (when originally earned), then if you pay it into a pension (without tax relief) and are then taxed on 75% of it on the way out again, you're very much down on the deal....

It wasn't taxed when originally earned (divorce settlement). So am I right in thinking it'll be better for tax to put it in the pension?

Assuming it came from savings as part of the settlement, then it will have been taxed, maybe not by you but by your ex. As I understand it that means you can't claim tax relief on it in a pension, so no point really.

£20k in an ISA now, £20k in an ISA in April only leaves £10k for the following year. nvest it in the same way you would your pension and you won't pay tax on taking it out either.