Hi. I have an income of around £50K. The company I work for has recently been sold and I had shares in it so I will have to pay capital gains tax. I also received dividends this year from the shares I held before they were sold. I would like to put as much money as I can into my private pension pot to reduce my tax bill. Assuming I have carry forward amounts to cover, would I gain anything from putting £50K into the pension pot? could I put more in?
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Trying to reply to expert. Not yet got question fully answered. The reply to expert button doesn't seem to work. But trying again. Would I only get tax relief on the tax payable on the £50K earnings this year, or could I get tax relief from previous year's earnings and/or dividends or savings interest or even capital gains tax this year?
Jak, thank you for your reply.As the pension contributions are in this year the relief would be against this year's tax.Dividends carry a notional tax. If your earnings were reduced to Zero through the pension contribution you make, that means £31,865 of taxable income would attract tax at 20%.If this income includes non earned income i.e interest and dividends then there would be no additional tax payable on dividend as the notional tax would also be tax credit against the final tax calculation.As far as CGT goes, the rate is governed by your total taxable income in the year. If it remains within the basic rate threshold then your CGT rate would be 18% otherwise may be 28% or a combination of both.You won't tax relief from previous year's earnings or tax paid.I hope this is helpful.