C Cheng
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Can pension contributions reduce tax if majority of my income is dividend and savings income?
Assume my total income is £80,270 including salary £270 salary, dividend income £20,000 and savings income £60,000 savings income. Can I make one-off pension contribution of £30,000 to SIPP to obtain tax relief: 1) Get extra £7,500 on top of £30,000 pension contribution in my pension account 2) Basic tax bracket expanded by £30,000 to £80,270, so that my tax payable will be calculated according to basic tax rate (£12,570 income tax allowance and 20% income tax rate; £2,000 income dividend tax allowance and 8.75% dividend tax; £1000 saving income tax allowance) -
Clarification on definition of “annual earnings” for tax relief on private pension contribution
According to gov.uk, “You can get tax relief on private pension contributions worth up to 100% of your annual earnings.” If I make one-off contribution to Self-Invested Personal Pension (“SIPP”) which is a Defined Benefit Scheme, please clarify if “annual earning” including 1)dividend income, 2)savings income and 3)residential rental income. What is the maximum amount of one-off SIPP contribution I can made, assuming that I have £1,000 salary income , £20000 rental income, £15000 dividend income and £20000 interest income?