FREE money in your pension plus 7.2% more in your pocket using Tax Credits

langtone

I believe ( please correct me if wrong ) that :

If you are earning less in 2008-09 than 2007-08 then this years Tax Credits are based on this years earnings.

Put £1000 into a pension and you get an extra £370 tax credit. ( You are deemed to have had £1000 less taxable earnings and credits reduce by 37% with income )

Not only that but 2009-10 tax credits will also be up by £370 as they will be based on 2008-09 unless you will earn less that year.

So put £ 1000 in a pension (before tax), get £740 back in your pocket, tax free, over 2 years. Take it as income and only get £690.

So you turn £1000 ( before tax ) into £1000 in your pension and still get £740