She paid the maximum into her pot, reducing her taxable income from about £120,000 to £80,000
Paying into a pension can reduce your tax bill because you can claim tax relief on the money you pay into a scheme
Workers who earn over £100,000 begin to lose their personal allowance . You lose £1 for every £2 that you earn above £100,000, so by the time you earn £125,140, you have lost your full tax-free allowance. Paying into a pension can reduce your tax bill because you can claim tax relief on the money you pay into a scheme.is based on the top rate of tax that you pay, so if you earn more than £50,270, you would get 40 per cent tax relief as a higher-rate taxpayer. If you earn more than £125,140, you would get 45 per cent tax relief.
At the time when Mc Gettrick was paying as much as she could into her pension the limit was £40,000. . You effectively “swap” your higher salary in exchange for a tax-free benefit. It doesn’t have to be a pension contribution, and some employers offer incentives such as a car purchasing scheme this way, but this is the most common.
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