Any tax relief on pensions?
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kasper
Apprentice
Joined: 17 Dec 2004
Posts: 7
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 Posted: 11/11/07 - 10:59 Post subject: |
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| I have pension which I am paying for 10 years now. I know that there are some tax reliefs normal and higher, but I don’t know how someone can get tax relief. Can someone explain to me how do I get tax relief, and what’s about higher rate of tax relief. Are these tax relief are related to bought state and occupational pensions? |
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alejandrina
Apprentice
Joined: 19 May 2007
Posts: 9
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| Posted: 12/10/07 - 23:41 Post subject: |
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Well tax is related to state and occupational pension, so everyone has to pay tax on their pension lump sum. So if you make your contribution for example £100.00 of gross contribution, after deducting basic rate (currently 22%) tax. Amount you pay to pension provider is £78.00
The personal pension provider then reclaims the difference between the gross contribution and the amount you pay – in this case £22 – from the Inland Revenue and adds it to your plan.
Higher tax relief are related to situations when you pay tax at 40% then you would reclaim the difference between 40% and basic rate of 22% i.e. 18%, from your local tax inspector who will adjust your tax coding to compensate you.
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