Flashcards in Chapter 1 - Contributing to Pensions Deck (15):
As much as like
TR limited £3600 if no rel or 100% of RE
Under 75 for contributions
At source. Cont paid net
Employer scheme. Net pay
Employer cont. paid gross Wholly and exclusively.
Total grossed up income from all sources.
Less deductions, eg charity, trading losses.
Pension cont can reduce ANI to reduce tax.
ANI over £100k... PA lost £1 for every £2 of ANI. All lost at £122k.
Unauthorised payment (charged) if..
All PCLS received last 12 months is over £7500
If greater than normal. 30% more
Extra conts more than 30% PCLS
If conts can be made by someone else
Recycling pre planned
Advantages of Pensions in LL
Possible restoration of PA
Boost retirement funds. Bigger pot
Out of estate cash
Gifting out of estate out of income.
Disadvantages in LL
Short time frame. Need medium or high ATR
No TR after age 75
Pension income means tested
Advice costs money
Pension Input Period
Run in line with tax year. Cant be changed.
Input amount is total gross for MP.
Not in year of death. Or terminal illness
For DB...increase in value of benefits with CPI and factor of 16.
Eg... if benefit increase is £5000 from £20k...
£20k x 16 = £320k
£25k x 16 = £400k
So...annual allowance input amount is £80k
Annual Allowance Charge
Annual Allowance is £40k.
If input exceeds allowance. Excess charged at persons marginal rate. If more than £2k, scheme might pay, but subject to input value being greater and pension benefits may be reduced to compensate.
Was £215k. 2010/11 reduced to £50k with 3 carry forward years. Now £40k.
£10k only once benefits been accessed.
AA - the past.
Carry forward. 3 tax years.
Must have been member of reg scheme.
Must use current year first. Then chronological order.
Does not need to have UK RE.
AA - 2015/16
Transitional. PIP now for tax year.
New PIP from 9/7/15 but closed 5/4/16 so half a year, so prev year into two halves.
So, as one off, AA was £80k for that year if member of scheme at 8/7/15. Input relevant to pre alignment year only.
3 years only. Max £40k less any amount used in post alignment year.
AA - the present.
AA tapered for high earners.
First get net income.
Adjusted Net Income Test. Has to be at least £150k to meet test. Adjusted income is NET Income plus net pay contributions plus employer input value.
Threshold Income Test. At least £110k.
This is net income plus any salary sacrificed for pension contributions less gross amount of any relief at source contributions.