Building on the previous AVC thread. Been giving this a little more thought inlight of 40% tax relief on only the amount you earn above the 40% threshold and I have some ideas/solutions. If for arguments sake you have an outside business/consultancy and you make £5k a year profit in this business and there are no other expenses. You are then liable for 40% tax on these profits (if you are a 40% tax payer). Thus leaving you with £3k of your hard earned. However, if you put all of this £5k into an additional pension then this will be topped up by the government by 40% and you have no tax liability. The only caveat is that you don't exceed your £40k allowance a year. Thoughts?