Tax allowance

[Half full]

My salary is 60k per annum and For the last 12 months and up to October I have 2k per month taken in AVC,s, I am to retire in October of this year; Question will I need to pay back the 40% tax relief; due to retiring part through the tax year (my pension/income will be small for the first couple of years from November this year(5k per annum)

Hope you can help;

Thank you.

Half full!

[AmanSood]

You won't have to pay back tax relief but your pension payments would be taxable at 20% (given your level of income in this tax year). It may therefore be worthwhile delaying taking out your pension (state and private pension) until next year (depending of course on the amount of your pension).

[someone]

You won't have to pay back tax relief but your pension payments would be taxable at 20% (given your level of income in this tax year). It may therefore be worthwhile delaying taking out your pension (state and private pension) until next year (depending of course on the amount of your pension).

Won't his income be 30K (ish) this tax year, therefore he will only get 20% tax relief on his pension contributions this year?

But the pension company will only claim 20% tax relief anyway so there shouldn't be any "40% tax relief" to repay.

Although there shouldn't be any additional tax to repay, his tax code may have been adjusted to take account of his pension contributions. But I don't know how that might affect any balancing payment at the end of the tax year.

He may, or may not, be better not paying into his pension for the rest of the year as the only tax relief he will get is on the 25% tax free lump sum unless his pension will be inside the tax free allowance. (My own view is that it's not worth paying into a pension and tying up the money with all the vagarities of changes of taxes on pensions in the future in return for a nominal amount of tax relief)

[bd6759]

Although there shouldn't be any additional tax to repay, his tax code may have been adjusted to take account of his pension contributions. But I don't know how that might affect any balancing payment at the end of the tax year.

This is how I read the question.

If relief has been given via his tax code, that relief will not be due and will be clawed back.

[Half full]

Thank you all.

Much appreciated.

Terry