I have inherited a self-invested personal pension from my dad. He died after the age of 75, so any income I take is taxed as earnings. As I earn over £50,000 a year, any income I take from his pension would be taxed at 40%. My question is, if I increased my employee pension contributions to my full salary amount every month and then used my inherited pension to live off, would my tax lower back down to 20% as long as I did not take more than £50,000 a year out of my inherited pension? 

Arthur Weller replies: 

It may be possible to do as you have written. See HMRC’s Employment Income Manual at EIM42700. But you need to note: (a) your salary sacrifice should not reduce your earned income to below the national minimum wage; (b) check what impact a lower earned income will have on your National Insurance contributions position; (c) the total of employer and employee pension contributions should not exceed the pension annual allowance of £60,000; and (d) ask the inherited-SIPP provider what PAYE code they will use and be ready to reclaim overpaid tax. Independent financial advice is strongly recommended.