Skip to main content

This is a new service – your feedback will help us to improve it.

  • Pension Relief on Dividends

    Hello, I have been unable to find anything to confirm what is quite a simple query. As I understand it, dividend income contributes to defining whether or not you are a higher rate tax payer. You pay 33.8% tax on dividend income above the higher rate threshold. You can claim higher rate tax relief on pension contributions at 20% upto the amount of higher rate tax paid. But can you claim this relief on Dividend income? Example 1: Higher rate threhold £50k, £40k salary, £20k dividend income, £5k personal pension contribution (including basic rate relief). Can £1k (£5k * 0.2) of higher rate pension relief be claimed? If the answer to Example 1 is Yes: Example 2: All as per Example 1 but pension contribution is £15k. Is the higher rate pension relief capped at £3380 (£10k*33.8%), as that is all the higher rate tax that has been paid? Many thanks in advance for any assistance.