Tax Forum :: Free Tax Advice

I retired earlier this year, but as I’m still in my mid 50’s haven’t yet taken my Final Salary company pension.

My only earnings this tax year is £500 but I do have quite a few ordinary UK shares, in FTSE companies, which pay a reasonable dividend of £15,000 per year.

I understand that the first £5,000 of dividend income is tax free and the remaining £10,000 can be set against my personal allowance, making £10,500 of income for 2016/17

Am I allowed to use the full £10,500 as a SIPP contribution for the tax year?

You can but unfortunately tax relief would only be available on £3,600.
Relief is limited to the higher of £3,600 or 100% of net relevant earnings, dividends are not net relevant earnings.

Many thanks for your reply, LozaACCS.

It wasn't what I wanted to hear, but it was as I expected.

So does rental income from residential property count towards my earned income?

Many thanks.

So does rental income from residential property count towards my earned income?

No, it does not.