Up to 60% tax relief, if you have taxable income above £100,000

For those that have relevant taxable income above £100,000, up to £125,140 (2023-24), investing via a pension fund can be incredibly advantageous as the effective tax relief that is possible on contributions can be as much as 60%.

This is because for every £2 of earnings above £100,000, the tax-free Personal Allowance (£12,570 for 2023-24) is reduced by £1. Thus, for those that earn £125,140 or more, there is no Personal Allowance at all.

By making a pension contribution to reduce your taxable income to £100,000, you would regain your Personal Allowance. This equates to receiving tax relief on that pension contribution effectively of 60%, due to the additional tax-free earnings created by any re-gained Personal Allowance.

If you might be affected by the above loss of Personal Allowance, contact us by clicking here to discuss how you might be able to obtain the 60% tax relief to which you could be entitled.