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Where Taxpayers and Advisers Meet

unearned income pension tax relief

petergibbinson
Posts:159
Joined:Wed Aug 06, 2008 3:53 pm
unearned income pension tax relief

Postby petergibbinson » Tue Jan 20, 2015 11:23 am

My wife pays £2880 into a registered pension scheme (a SIPP) which then has the tax relief added (£720) to make a total contribution of £3600
She only has unearned income (bank account interest, dividends and rental income)..but when I fill the tax return out online (and put £3600 into box 1..payments to registered pension schemes) via FTAX software it adds the pension contribution to income to increase the level at which higher rate tax is liable.
Both FTAX and the HMRC software dont seem to recognise the difference between earned and unearned income from a tax calculation persepctive and pension contributions.
I've read the notes and it doesnt say anywhere not to put the pension contribution on the tax returned if you only have unearned income? But the above treatment of the calculation looks wrong to me. Any thoughts?
Should I just leave the contribution off the tax return?

jpcentral
Posts:924
Joined:Wed Aug 06, 2008 3:28 pm
Location:Loughborough
Contact:

Re: unearned income pension tax relief

Postby jpcentral » Tue Jan 20, 2015 5:09 pm

Put the contribution on the tax return. She is allowed to make £3,600 gross contribution whether or not she has any "earned" income. It is only above this figure that there might be an issue.
John Perry
Central Business Services
Loughborough
http://www.centralbusiness.co.uk


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