The Basic Rate and Higher Rate bands are extended by any GROSS PERSONAL PENSION CONTRIBUTIONS or any GROSS GIFT AID DONATIONS that are PAID during the tax year.
For example, if an individual makes GROSS PERSONAL PENSION CONTRIBUTIONS of £10,000 and GROSS GIFT AID DONATIONS of £1,000 in a tax year, their Basic Rate Band will be extended to;
£48,500 (£37,500 + £10,000 + £1,000) from £37,500
and their Higher Rate Band will be extended to;
£161,000 (£150,000 + £10,000 + £1,000) from £150,000.