Client works for NHS and personal pension contributions are deducted from gross earnings thus securing tax relief at 40%. Client has additional self employment income making him a 50% taxpayer. Is he entitled to the additional tax relief to the 50% level on his pension contributions?
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As the pension contributions are deducted from gross pay he is effectively getting relief at his highest rate of tax. If you put the gross pay before superannuation contributions in your computations and then put the pension contributions in the computation as a deduction, you will see that you will get the same answer.
Thanks for that however problem is that client will only have received relief through salary at 40% because it's the selef employment income that makes him a 50% taxpayer. The additional needs to be claimed through the tax return then?
He is getting relief already
As John R says, although he is only taxed at 40% for his employment, because the pension is deducted from the salary before it is taxed, this gives a lower taxable figure using up the 40% band and pushes less of his self-employment into the 50% band. So a part equal to the pension payment will be taxed at 40% instead of 50% - giving him the additonal 10% relief.
You are, effectively, claiming relief thorugh the return - not by claiming for pension contributions, but by showing a lower amount of self-employed income liable at 50%.
Cathy