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TonyTax
TonyTax, Tax Consultant
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if a chargeable event pushes me into a higher tax bracket [40%]

Resolved Question:

if a chargeable event pushes me into a higher tax bracket [40%] would a pension payment [stakeholder] reduce or even mitigate the CEC?
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

You get tax relief for a maximum of £3,600 of gross contribution to a stakeholder pension at your top rate of tax provided you are not over 75 or over. Remember that tax relief at 20% is given at source. You can pay more in but the excess over £3,600 will not qualify for tax relief. If the top-slice of the chargeable event gain takes you into the 40% tax bracket, then a stakeholder pension contribution will serve to mitigate the additional tax due on the gain. Whether it will wipe out any liabiliy depends on thje figuires.

There is some useful information in the HMRC helpsheet HS320 on life assurance gains.

I'd be happy to let you know how much of your chargeable event gain goes into the 40% tax band if you let me know how much the gain is, the tax shown as deducted, the number of relevant years as shown on the certificate, how much your annual income is before tax and your date of birth.

I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15755
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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