How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask taxadvisor.uk Your Own Question
taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4985
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
54961312
Type Your Tax Question Here...
taxadvisor.uk is online now

I would like to pay a lump sum (£25k) from my savings into

Resolved Question:

I would like to pay a lump sum (£25k) from my savings into my group stakeholder pension scheme before the end of March. I want to reduce my taxable income to below £100k in order to get back my personal allowance. I can't pay this now before the end of this financial year through my salary, and so needed to know if paying this straight from my savings would also reduce my taxable income?
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

The contributions you make are based on your earnings for receiving tax relief and the contributions are capped at £40,000 for the current tax year.

It does not matter whether you pay this lump sum out of savings from earned income or out of salary. The payment of this premium would reduce your taxable income.

I hope this is helpful and answers your question.


If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

Hi

You specifically say "earned income or out of salary". This payment will come from previous years of savings I have, and so is not really income from this tax year. Will that make a difference and will it still reduce my taxable income when I do my self assessment?

I ask as it seems too good to be true!!

Thanks

Expert:  taxadvisor.uk replied 2 years ago.
Thank you for your reply.

The criteria for pension contribution relief is relevant UK earnings.

What I meant by savings from earned income or out of salary is that your level of salary determines your relievable pension contribution. It does not matter that the actual payment is out of savings from previous years.

I hope this is helpful.
taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

Best wishes.