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Where Taxpayers and Advisers Meet

Tax Relief on SIPP contributions

lander
Posts:13
Joined:Wed Mar 22, 2017 1:17 pm
Tax Relief on SIPP contributions

Postby lander » Sat Feb 19, 2022 2:01 pm

I know we get tax relief at 20 or 40% on contributions to a pension fund made from salary earnings, (which suffer PAYE)
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What I would like to know, please, is if I get paid by dividends from my company, -not salary-which has tax at 7.5% and 32.5% deducted, whether there is a an analogous tax relief for dividends.

ben_power
Posts:81
Joined:Tue Feb 27, 2018 8:34 pm

Re: Tax Relief on SIPP contributions

Postby ben_power » Sat Feb 19, 2022 7:49 pm

To benefit from tax relief HMRC classifies various sources of income as relevant or non-relevant earnings. Dividend income in 'non-relevant' unfortunately. If your only income is via dividends you will be limited to £3,600 gross which would mean a net payment by you of £2,880.

If your company pays you 'some;' income, up to your personal income tax allowance of £12,570 for example, this would count as relevant earnings and your annual allowance would increase to £12,570.

lander
Posts:13
Joined:Wed Mar 22, 2017 1:17 pm

Re: Tax Relief on SIPP contributions

Postby lander » Sun Feb 20, 2022 12:54 pm

Curses!
Thanks a lot.


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