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Basic rate band extension and dividends

Could somebody please clarify if you have a paye salary of say14,000 and dividends of 50,000 and you made a gross pension contribution of 5,000 that your basic rate band would be extended by the amount of the gross pension so that you would get higher rate tax relief, even though the higher rate tax you would be paying is at the dividend rate of 32.5% not 40%?

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By BKD
07th Feb 2013 13:57

Correct

Which is why overall tax relief in this case would be 42.5%

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