Is it only income from employment that attracts tax relief on pension contributions?

26 June 2023

Question by Olivia

My husband isn't working currently, but thanks to recent interest rate rises, will be earning about £15k this tax year from interest. If he contributes the same amount to his pension, will this full amount attract tax relief, or is it only income from employment that attracts tax relief on pension contributions?


Answered by Boring Money

Hi Olivia, they're not relevant earnings and he is probably in a bit of a holding pattern, for now he would be limited to his stakeholder allowance of £3,600. Depending on when he returns to work and the tax band at this point, he could defer contributions and get greater relief in future. Or if not likely, moving funds between you both (no tax due to interspousal exemption) can minimise tax on savings or maximum tax relief on pension contributions. Depending on your respective ages, earnings and if you're willing to move funds accordingly, there is plenty of potential efficiency to be gained. Happy to chat further over email or a call if suitable, Tom Eyles, Lathe & Co. Thomas.eyles@latheandco.co.uk 07817 511968

Answered by

Boring Money