Higher rate tax relief on pension contributions

[JOHNRE]

Hello, any tax experts out there?!
I am currently in receipt of an occupational pension which places me just below the 40% tax threshold. I have a SIPP and I am considering putting the full £40K into it this tax year. I understand that if I contribute £32K my SIPP provider will sort out the additional £8K via HMRC.

My query is.....if I earn more to put myself into the 40% tax bracket, am I correct in assuming that only the amount I actually earn above £43,000 can be claimed for tax relief at the higher rate?

John

[jason13]

Do you have any income apart from your occupational pension? You can only pay 100% of your annual earnings into a pension and IIRC income from pensions doesn't count as earnings. Unfortunately, I cannot find a reference right now because a lot of information was lost when HMRC's web site was moved to gov.uk.

Hopefully someone else can add some details.

[LozaACCS]

Jason is correct, you would need earnings other than your pension income, the legislation is at S189(2) FA 2004.
It appears that you have a defined benefits (final salary) scheme generating the bulk of your income, and a SIPP which would be a money purchase arrangement, if so you would need earned income (defined at S62 ITEPA 2003) to fund the contributions, this could not include pension income.
Assuming you do have relevant earnings that do qualify then your assumption would be correct, remember that if the SIPP existed in the previous three years then unused contributions up to the annual allowance can be carried forward to the current year.

[JOHNRE]

Many thanks for your replies and my tardiness in responding (been away!). Yes, my only income is my Teachers Pension although I may have income from lettings in the future. Presumably this would count as "income" for pension contribution purposes?

[JOHNRE]

I have just read that rental income is not eligible. Damn!

[JOHNRE]

Am I correct in presuming that if all of my income is ineligible for pension contributions, I could still make a contribution of £2880 to my SIPP?

[jason13]

Yes.