Scottish Pension Tax Relief
BryceClark22
Member
Does anyone have a clue how Scottish Tax relief works for pension contributions? I understand the person can reclaim via self assessment etc but for my own calculations I'd like to know how it works.
Admittedly, because the CII only teach you English tax rules I haven't had much practice applying the same principles to a Scottish Rate Tax Payer.
Example:
Salary £160,000
Savings Income £35,000
Pension Contribution: £80,381 Gross (Relief at Source Personal Contribution)
I understand the person pays net of 20%, and the provider reclaims the 20%.
I have tried following the usual process to deduct the Pension Contribution and reinstate some of their Personal Allowance.
But then, extending the bands is where I am stuck given the endless number of bands we have in Scotland. Do I add gross contributions to each band? or just the 'Scottish Basic Rate' & 'Higher Rate' ?
Any guidance would be much appreciated!!
Comments
Hi Bryce,
You only add the gross amount of any pension contribution to the Scottish basic rate band to take into account the 20% relief at source.
The UK-wide threshold of £37,700 will apply for savings income, dividend income and capital gains received by Scottish taxpayers.
M&G Wealth have a good tool:- https://www.mandg.com/wealth/adviser-services/tech-matters/tools-and-calculators/tax-relief-modeller
Steven
I'd say the too was better than good personally :-)
We explain a bit in our SRIT article too - https://www.mandg.com/wealth/adviser-services/tech-matters/investments-and-taxation/income-tax-key-facts/scottish-rate-income-tax#interaction-with-other-aspects
The contribution reduces the adjusted net income as normal / lek it does UK wide - that's what drive the PA availability.
And it increases all the scottish tax limits above the basic rate limit, not just the basic rate limit. The increase to the basic rate limit is what generates the higher rate relief.
Great - thanks for the responses both. Really useful calculator too cheers