There's an old thread about this (https://www.askaboutmoney.com/threa...ithin-2-years-great-tax-planning-point.51333/) but I didn't want to revive a really old thread for my specific situation.
I noticed years ago that you can get a refund of your pension contributions @20% tax if you leave a scheme/job within 2 years of joining. If you're in the higher tax bracket, those same contributions would have been taxed @40% at source had you not contributed them to any scheme.
This of course only works if you leave your job within two years and don't want to keep your pension - you can't (or shouldn't) do this forever, so really it's a relatively rare situation to be in - I just happen to be in in right now.
I had assumed this loophole was closed, but to my surprise the pension provider mentioned that when I leave, the withdrawal will be taxed and has always been taxed at 20%.
So right now I can essentially avoid 20% tax on a portion of my salary, up to my maximum tax relief limit. Can anyone confirm that this is actually still the case? (I really thought that hole was closed)
If it's still possible, I have a few weeks left that I can contribute an AVC to my plan before I leave, but it will have to be with post tax money (as opposed to at source) given the timeframe, and I'll then need to claim back tax later.
This is why I need to ask - if I make an AVC with post tax money (originally taxed at 40%), and then withdraw the pension fund (including the AVC) @ 20% tax in a month or two after I leave, will I still be able to claim back the 40% tax originally paid at source for the AVC I contributed?
Is this loophole still open!?
I noticed years ago that you can get a refund of your pension contributions @20% tax if you leave a scheme/job within 2 years of joining. If you're in the higher tax bracket, those same contributions would have been taxed @40% at source had you not contributed them to any scheme.
This of course only works if you leave your job within two years and don't want to keep your pension - you can't (or shouldn't) do this forever, so really it's a relatively rare situation to be in - I just happen to be in in right now.
I had assumed this loophole was closed, but to my surprise the pension provider mentioned that when I leave, the withdrawal will be taxed and has always been taxed at 20%.
So right now I can essentially avoid 20% tax on a portion of my salary, up to my maximum tax relief limit. Can anyone confirm that this is actually still the case? (I really thought that hole was closed)
If it's still possible, I have a few weeks left that I can contribute an AVC to my plan before I leave, but it will have to be with post tax money (as opposed to at source) given the timeframe, and I'll then need to claim back tax later.
This is why I need to ask - if I make an AVC with post tax money (originally taxed at 40%), and then withdraw the pension fund (including the AVC) @ 20% tax in a month or two after I leave, will I still be able to claim back the 40% tax originally paid at source for the AVC I contributed?
Is this loophole still open!?