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bigduckontax, Accountant
Category: Tax
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I've just started investing in a crowd funding web site that

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I've just started investing in a crowd funding web site that issues short term loans. Interest is paid monthly on these loans. My understanding is that all of this is taxed as income, in which case I would be classified as a higher earner thus 40%.
But to confuse matters my employer operates a salary sacrifice scheme to boost my pension. I'm making a substantial contribution here which brings my earnings back down to a basic rate of 20%.
So my question is, when it comes to filling in a tax return am I to pay at 20% or 40% ?

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

Contributions to a pension scheme are allowable against Income Tax in the computation although the limits are being squeezed. You should declare your full income and the sacrifice as a pension contribution. This should reduce your income hopefully to a level below the higher tax bracket.

Remember that pension contributions in the 15/16 tax year may not exceed 40K and your overall pension pot (lifetime allowance) 1.25 million quid. In 16/17 this drops to 1m.

I do hope that you have found my reply of assistance.

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Thank you for your support.