Relief on tax not paid

[UncleEbenezer]

This year I'm paying myself national minimum wage. With the aid of a couple of small charitable contributions and crowdfunding investments, that takes me below the threshold for paying income tax.

So I can still get relief on up to £3600 pension contribution, right? Of course it gets taxed on the way out of the pension, so my gain is limited to there being 25% tax-free, but in principle I can make that contribution?

However, I also have an employer contribution into the pension. Obviously that's untaxed money, and also gets no tax relief. And it's more than the magic £3600.

Does the employer contribution affect whether I get tax relief on a payment of up to £3600?

[Taigo]

Hi U.E.

If you consider that many employees receive contributions to their pensions from their employer as well as making contributions themselves the logic is that you are also able to do this.

Royal London discusses employer contributions in detail here:

http://adviser.royallondon.com/technica ... ax-relief/

Their highlights are:
- Employer contributions are not restricted, however they must satisfy the 'wholly and exclusively' requirement to receive tax relief.
- Employer contributions count towards the annual allowance.
- There are a number of scenarios when additional implications need to be considered.

And the gov.uk website has information on personal contributions where your income is less than than the £2,880/£3,600 limit.

If you don’t pay Income Tax
You still automatically get tax relief at 20% on the first £2,880 you pay into a pension each tax year (6 April to 5 April) if both of the following apply to you:

1. you don’t pay Income Tax, for example because you’re on a low income
2. your pension provider claims tax relief for you at a rate of 20% (relief at source)

https://www.gov.uk/tax-on-your-private- ... tax-relief

[anothername]

A similar question, Can I reclaim more tax than I have paid via a SIPP ?

I have a job that pays £12,000 P.A, and also get a small forces pension of £1,200 P.A

So total income £13,200 which will result in income tax of around £340 P.A.

Can I pay £12,000 into a sipp (100% of my Relevant earnings) and get £2,400 tax relief added at source ?

Have looked at the various gov web sites and as far as I can see there is nothing that actualy says you have to pay more tax than you are going to get back in relief !! but it seems a bit too good to be the case

[Alaric]

Have looked at the various gov web sites and as far as I can see there is nothing that actualy says you have to pay more tax than you are going to get back in relief !! but it seems a bit too good to be the case

You can have no taxable income whatsoever and still pay £ 2,880 into a pension plan, getting tax relief to take it up to £ 3,600. The social logic was that it enabled those in a career break to maintain pension contributions for their old age.

[JohnB]

Yes, you can get tax relief on 100% of your total earnings, not your earnings after your annual allowance has been deducted. I asked the same question here before, see viewtopic.php?f=17&t=2523, or http://www.accountingweb.co.uk/any-answ ... low-earner http://forums.moneysavingexpert.com/sho ... ?t=5192668 and the definitive finance act http://www.legislation.gov.uk/ukpga/2004/12/section/190 which shows the smooth transition between £3600 if earning nothing, and X if X>3600

So if you earn £35k and put £28k in a pension, the government adds £7k even though you only paid 20% on £25k, ie £5k

If you earn £10k and put £8k in a pension, the government adds £2k even though you paid no tax at all.