Relevant Income Calculation

Relevant Income Calculation - For High Earners

The 'Relevant income' calculation is used to work out your tax position for maximum pension contributions and tax relief for higher earners as part of the Government’s restriction on pension tax relief.  Relevant income is not the same as UK earnings.  It includes both earned and unearned income.

What is relevant income?

• Employed Earned Income
• Self Employed Earned Income
• Pension in Payment Income
• Redundancy Payments in Excess of £30,000
• Employer Pension Contributions (if from a salary sacrifice arrangement)
• (plus after 6 April 2011 all Employer Pension Contributions)
• Unapproved Share Option Scheme receipts
• Savings Interest
• Dividends from things such as shares and investment trusts
• Rental income
• Trust income
• Chargeable event gains from a non-qualifying life policy – the whole gain with no top slicing relief

LESS

• Individual Contributions to a pension up to £50,000 per year (up to April 2014) and £45,000 per year (after April 2014)
• Offsettable Losses/Trade Exps allowed under Income Taxes Act 2007 (s24)
• Gift Aid Charitable Donations