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Q&A » Pensions
In the article Pensions For Beginners
It mentions that you are not taxed on the money you put into the pension. This suggests that any contributions are made before tax.
Is this in addition to tax relief at 20%?
Thanks James
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410Is this in addition to tax relief at 20%?
lol no. The government doesnt actually give you extra money, it just doesnt take any away.
If you are a basic rate taxpayer, you are taxed as usual on your income, but the pension claims back the basic rate tax. If you are a higher rate tax payer, this still happens but you can then claim back the difference between basic and higher rate tax through your tax return.
manzanill
Posted on 22 January 2010 |
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824There are 2 ways of getting tax relief.
If you are in a Company Pension Scheme, or a Group Personal Pension Scheme, your employer will deduct your contributions from your gross salary before it is assessed for tax on PAYE basis. You therefore get tax relief at your highest rate of tax.
If you pay contributions direct to an insurance company for a Personal Pension Scheme, you get relief at the basic rate only because the insurance company grosses up those contributions and claims the extra from HMRC. If you are a higher rate taxpayer you have to claim the extra tax relief yourself via your Tax Return.
It is one way or the other, but not both.
Mike
Posted on 22 January 2010 | Love 1 love
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