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Posted Wed, 22 Nov 2023 09:42:10 GMT by
Firstly - Apologies, if this is long-winded. I don’t want to miss anything out. I took redundancy from my job in October. I am now starting up a business. I want to know about pension contributions and tax deductions on allowable expenses. Here is my expected income for 23/24: - I had earned £24k in salary until October. - The redundancy pay was £97k. (As I understand it 30k of the redundancy is tax-free leaving 67k). - I will also earn £12k in property income (which I understand I cant use as pension contribution). I currently submit this income using self assessment. So total taxable income (as I understand it ) = 24 + 12 + 67 = £103k I am looking to spend £10k in equipment related to my business (I understand the kit comes under allowable expenses). My intention is to avoid paying 40% tax, if I can, through mainly pension contributions and also equipment purchase. I would declare this in self assessment. I am intending to Spend £10k on kit as well as contributing £34.4k to pension (grossed up this would be 43k). 43 + 10 = 53. So… 103 (total pay) – 53 = 50 (threshold for 40% tax). Whilst, as I understand it, the maths stacks up, I would like to know if my plan abides by tax rules. Could you please advise? Also, Does the kit I buy need to be new in order to qualify for tax deductibility ? FYI, I have already paid tax on the work income and redundancy income. I didn’t want to muddy the waters by including that too.
Posted Fri, 24 Nov 2023 07:25:51 GMT by HMRC Admin 25
Hi Ash Gordon,
For details on pension contributions please refer to:
Tax on your private pension contributions
The kit you are buying doesnt need to be new.
Further guidance on expenses are here:
Expenses if you're self-employed
Thank you, 

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