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[email protected], Accountant
Category: Pensions
Satisfied Customers: 617
Experience:  Executive Director at [email protected]
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My income is solely a final salary pension and state

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My income is solely a final salary pension and state pension. I have an uncrystallised defined contribution personal pension that I would like to pay into while I’m under 75. Is my annual allowance £40k or is it £3,600 because pensions don’t count as earnings?

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Hi, welcome to JustAnswer. I'm [email protected], a UK-Qualified Chartered Certified Accountant with over 15 years of experience. I'll be answering your question today.

According to HMRC guidance,

There’s no limit on the amount that an individual can contribute to a registered pension scheme. If you’re a UK resident aged under 75 you may receive tax relief on your contributions to registered pension schemes.

Tax relief is limited to relief on contributions up to the higher of:

  • 100% of your UK taxable earnings
  • £3,600
Please note, that pensions are treated as income and taxable.

If in doubt, you can seek further assistance from the pensions helpline on

Telephone: 0800(###) ###-####

I hope I've answered your question? If, however, any part of my response is unclear, please do let me know and I'll try to explain it further.

Customer: replied 10 days ago.
Hi, thanks for your reply. It’s this that made me query this:
Customer: replied 10 days ago.
Specifically under the section:Earnings that attract tax relief
Section 189(2)-(7) Finance Act 2004For most people the amount of tax relief they can have on their pension contributions is limited to 100% of their relevant UK earnings that are chargeable to income tax for the tax year (there is another low limit for some - see Annual limits above). If relief is sought within the 100% limit an individual may want to establish how the various payments received as part of earnings have been taxed, to see what counts for this limit.
Customer: replied 10 days ago.
It states: For the avoidance of doubt a pension is not classed as earnings and cannot be included in the definition of relevant UK earnings.

You are right. Even though HMRC taxes individuals on the pension income as consider it to be a taxable income, but for tax relief, this is excluded.

So according to this criteria, if you exclude your pension earnings; £3,600 is the applicable limit for you.

[email protected], Accountant
Category: Pensions
Satisfied Customers: 617
Experience: Executive Director at [email protected]
[email protected] and other Pensions Specialists are ready to help you