can someone please explain to me the statement below preferably with an example. "The personal allowance The first allowance is an annual limit which allows an individual to obtain tax relief on contributions up to £3,600 per annum or their full taxable UK earnings if higher."
Hi This is basically saying that you can contribute your full taxable earnings to your pension pot per year, subject to the annual allowance (£40,000 between you and your employer). However, if you do not earn taxable income (or less than £3,600), you can contribute £3,600 per year. So if you earn £50,000, you (and your employer) will only be able to contribute £40,000. If you are unemployed, you can contribute up to £3,600 per year. Make sense?
