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6 key points about pensions tax relief
Tags: Hmrc | Iht | pensions tax relief | retirement planning
By International Adviser, 2 Oct 18
How the UK Government is encouraging people to save for their retirement
Sanlam UK financial planner Carl Drummond shares his top tips about pensions tax relief.
Tax relief on contributions
You can get tax relief on private pension contributions worth up to 100% of your annual earnings.
This happens automatically if your employer takes workplace pension contributions out of your pay before deducting income tax or if your pension provider claims tax relief for you at a rate of 20%.
In addition, if you pay 40% or 45% income tax, you can claim tax relief on the extra payment above the standard 20% rate.
As an example, someone paying at the 45% rate who made a gross pension contribution of £10,000 ($13,040, €11,250) would actually make a net contribution – once all tax relief had been claimed – of £5,500.
This means a rate of return before investment due to tax relief of 81.8%.
Click through the slides above to see Drummond’s other top tips…
