Is it permissible to "double dip" pension and VCT tax reliefs ?
I have self-employed earnings of £40k (after expenses; I am a sole trader). Because I have sufficient other savings I put all my earnings into a personal pension (£32k contribution which is then grossed up to £40k by my personal pension provider). I benefit from £8k tax relief ('relief at source') within the pension but I still owe BRT @ 20% through my tax return. My tax liability is 20% of £27,500 (£40k - personal allowance of £12,500) = £5,500.
However, can I offset that £5,500 by investing in a VCT? With VCT income tax relief of 30%, investing £18,333 (of my savings) in a VCT would wipe out that £5,500 liability.
Would HMRC have a problem with this "double dipping", as I am effectively already getting tax relief on the £5,500 income tax liability within my pension?
Answers/relevant rules or legislation much appreciated....
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