Client receiving small salary plus dividends
If a client is a higher rate tax payer who is receiving a small salary and the balance as dividends, then they could consider the impact of paying a pension contribution.
- David Ends is a director of his company – ‘Cul-de-sac Signs Ltd’.
- He receives a gross salary of £9,000 and dividends of £50,270 .
What will be the effective rate of tax relief if David pays a gross pension contribution of 100% of his salary to a pension scheme?