Higher rate tax relief and AVCs

PollyBunting

Thank you for reading:
My income with profit from rental income is over the basic rate tax band for 07/08. I'm considering buying added years from my Final Salary Pension scheme. My understanding is that the basic rate tax band will be increased by the amount of the grossed up basic net contribution which will reduce my tax bill. Am I correct in thinking I will still get the 18% adjustment via my tax code? Am I also able to carry back the contribution to 07/08 as I'd be making the contribution in 08/09 tax year?

I've read other info posted here, but am still unsure.

jem16

PollyBunting wrote: »

Am I correct in thinking I will still get the 18% adjustment via my tax code?

It's 20% and 20% for this tax year and not 22% and 18%. You get the extra rebate via your tax return.

Am I also able to carry back the contribution to 07/08 as I'd be making the contribution in 08/09 tax year?

No. It would count to 08/09.

david78

If you are in a Final Salary Scheme payments are usually made out of gross pay where this is possible. If you are making monthly contributions to get your added years then you will get 40% tax relief automatically. If you make a lump sum payment and this is small enough that it can be taken from 1 months salary, this is also paid out of gross pay.

I don't think you can carry-back contributions any more.

jem16

Quite correct David - I had missed the Final Salary pension in the op's post.