Joe Brough outlines the tax relief available when making pension contributions.
Making pension contributions is a tax-efficient way of saving for retirement. The planning and timing of pension contributions can also contribute to a tax-efficient remuneration strategy for owner-managed businesses.
When UK individuals aged under 75 who are members of a relevant pension scheme make personal pension contributions, tax relief is available on their gross contributions in a tax year, up to the higher of their ‘relevant UK earnings’ and £3,600 (£2,880 net).
‘Relevant UK earnings’ for pension contribution purposes include:
income from a trade or profession; and
furnished holiday lettings profits from the UK or EU.