Example of the Tax Benefits of Late Contributions to Pension Funds
Paid in £2,808 £ 7,800
Tax relief £ 792 £ 2,200
Total £3,600 £10,000
Tax Free Cash 25% £ 900- £ 2,500
Residual Pension fund £2,700 £ 7,500
Net cost £1,908 £ 5,300
to achieve
a Pension Fund of £2,700 or £ 7,500
Means 41.5% growth from the Inland Revenue.
If you are sitting on cash and have ‘earned income’ the Inland Revenue will allow you to make a pension contribution of £3600 with or with out earnings and up to you entire income or £225,000 which ever is the lower.
If you are a higher tax payer the advantage is even greater!!! An extra 18% tax relief
Make sure you have sufficient emergency funds and have accounted for all planned expenditure prior to making a contribution of this nature.
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