Offsetting taxable profits with Pension contributions

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    Offsetting taxable profits with Pension contributions

    Apologies if this has previously been posted, I have searched but can't find much.

    I have recently moved in with my partner and subsequently started renting out my house. I have been lucky enough to make a 5 figure pre-tax profit (most of which will be sunk into paying off my rather high mortgage) however I still face a ~£5k tax bill.

    Whilst I am happy enough to pay my fair share of tax, I would like to investigate options of offsetting some of this bill to invest in my retirement. I understand some profits can be invested into a pension account, but i cannot find much information.

    Does anyone do this? Is there a guide I could read anywhere?

    many thanks for any advice you can offer.

    If it helps, I am a higher rate tax payer.

    You can make tax efficient pension payments, but you can't use them to offset the income for your business.

    If you were operating your rental business as a company, it could make pension contributions from its income as a business expense.
    Which is possibly where the notion has arisen.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).


      Whilst you can't offset the income from your rental, you can easily contribute from your salaried earnings.

      So if your property profit is £12500 pre tax. Then make the same contribution through PAYE to your pension. It is just a case of moving money. If your only source of income is property then not so straightforward. However from your post it sounds like you are employed.

      In addition, I would be looking to bring all earnings into lower tax bracket. This would depend on your current financial situation. How far into the 40% bracket you are etc....


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