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Can someone look over the math for pension tax relief calculations for a higher rate tax payers?
If a higher rate tax payer invests £1,000 into a private pension, the pension provider invests £1,250 on his behalf, considering the basic rate tax payment. Relief on the higher tax rate is then achieved via the self-assessment. However, what would be the tax relief in this case? Most websites seem to suggest that it should be an additional £250, for a total pension tax relief of £500. However, a net amount of £1,000 is equivalent to a gross (i.e. pre-tax) amount of £1,667.
Shouldn't he total pension tax relief on this £1,000 then actually add up to £667? What would the self-assessment return amount be?
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- 6 years ago
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