Tax Relief Entitlements

There are certain limits to your tax relief entitlement.



You are entitled to tax relief on whichever is the greater of:

• a)the basic amount of £3,600 (e.g. for non-taxpayers)
• b)your total earned taxable UK earnings

And whichever is the lesser of:

• a) your total earned taxable UK earnings
• b)£225,000 (the annual allowance for tax year 2007/2008)

The basic amount of £3,600 is a tax relief limit which includes your contributions, tax relief and any extra bonuses from your scheme provider. This is the amount that you are allowed to claim tax relief on if you are currently unemployed, a non-taxpayer, or if you wish to invest on behalf of someone else, for example a minor. If you join a pension savings scheme whilst resident in the UK and then move abroad, you are entitled to tax relief on the basic amount for up to five years after leaving the UK. If your tax relief is limited to the basic amount, you can make contributions of up to £2,808 and receive tax relief of up to £792, bringing your total to £3,600. Again, the amount you are allowed to contribute to your pension savings account is not limited, there is merely a limit on how much tax relief you are allowed to claim on your contributions.

You are not entitled to tax relief if you are over seventy-five years of age, or if your employer pays your contributions for you.