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Sam, Accountant
Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Mr A is in a defined pension scheme.

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Mr A is in a defined pension scheme. Employer pays in 10% of basic each month. Mr A is not required to contribute unless he wishes to. Mr A is a higher rate tax payer. Mr has made a capital gain this year. there this is subject to 28% tax. Mr A is considering paying in to reduce his tax band from higher rate to basic rate. This will then reduce his CGT tax to lower band of 18%. Can you please explain what Mr A has to do.

Hi Thanks for your question - I am Sam and I am one of the UK tax experts here on Just Answer. Mr A could make a pension contribution - for which he would then be able to reduce his basic rate band and possibly then become just a basic rate taxpayer, which would then allow some or all of the gain be just be charged at 18% But as he has a limit on what he can contribute - and you do not indicate how far into the 40% or 45% rate band he is - then this may not be a viable solution. So he would need to establish with his pension plan provider, what the maximum amount he is permitted to contribute for this tax year - to1) Not just bring him below the 20% basic rate band but also2) Covers the full capital gain arising. ThanksSam
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