Does covenant affect max contribution to personal pension?

3CC

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Hi,

Does anyone know if a tax efficient covenant will reduce the net relevant earnings for the purposes of calculating the max tax relief available from contributions to a personal pension.

D
 
dmkelly said:
Hi,

Does anyone know if a tax efficient covenant will reduce the net relevant earnings for the purposes of calculating the max tax relief available from contributions to a personal pension.

D

Yes they do.

However, you can also use them to reduce non-relevant earnings. So say you also had covenant of 4K and rental income (non-relevant earnings) of 10K, you could reduce the 10K by the 4K, and your NRE figure will not be effected.

Hope this helps
 
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