Kaplan Question no-129

The only pension contributions which Jack has made previously are a gross amount of £500 per month which he saves into a personal pension scheme. Jack has continued to make these contributions throughout the tax year 2020/21. Although Jack has been saving into this scheme for the previous 15 years, he is concerned that he is not saving enough for his retirement. Jack therefore wants to make the maximum possible amount of additional gross personal pension contribution for the tax year 2020/21, but only to the extent that the contribution will attract tax relief at the higher rate of income tax. Jack isself?employed. Histrading profit is £100,000 for the tax year 2020/21 and the previous five tax years. He does not have any other income and expects to make the same level of profit in future years. Advise Jack of the amount of additional gross personal pension contribution he can make for the tax year 2020/21 which will benefit from tax relief at the higher rate of income tax, and explain why this is a tax efficient approach to pension saving.