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  • Buy-to-Let

    Rental income not eligible for pension?

    After reading how some of you are utilising pensions (due to S24), I spoke to a financial advisor about the possibility of me paying into a private pension fund. My only income is from my rental properties.  He said rental income is not classified as "Earned income" and hence not subject to any tax relief i.e. I'll be paying from my net income into the pension.

    I'm a bit puzzled about this as the impression I got from the discussions here is that rental income is eligible for tax relief if paid into a pension.

    Have I misunderstood things?

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    May have to be via Ltd Co to get tax relief at the company rate of Corp Tax

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    My FA told me this, based on a basic rate tax payer:-

    You can contribute up to £3,600 per annum gross (£2,800 net of basic tax relief allowable at source and collected for you by the pension provider) into a pension without having any relevant earnings. Beyond this annual pension contribution allowance you have to have relevant earnings which is usually earned income. Relevant earnings would not include rental income, savings interest or indeed other pension income say from another scheme.

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    Your IFA is quite correct if your only income comes from Personal Owned BTL investment property

    This income is not net relevant earnings so it cant be used

    If you were investing via a Ltd Co You company could make Pension contributions


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    If you use a ltd company it could pay you a salary and that would qualify, or it could pay a director's pension. They are very tax efficient ways to take money out of a company.

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