Pensions

Question 1

What - intro

Answer 1

An individual can save towards their pension by making contributions each year. The contributions will receive tax relief up to the annual allowance e

Plus any growth within the pension fund is not subject to tax eg. Interest or dividends received

Question 2

Who else can contribute

Answer 2

Employers can contribute this is an exempt benefit

Question 3

How is relief claimed x2

Answer 3

At source - the pension contribution will be taken from the gross pay. Therefore relief given at source

Under a net pay arrangement - the pension contribution are made net, HMRC then top up the contribution by 20%

Higher rate taxpayers recover relief by having there rate bands expanded

Question 4

What is the max contribution

Answer 4

The max contribution a person can make is the higher if

£3600
Or their relevant income (employment income, trading profits FHL)

Question 5

What is the annual allowance

Answer 5

The maximum amount of relief an individual can recover it up to their annual allowance the unrestricted annual allowance for 23/24 is 60,000 PY 40,000

Question 6

When is the annual allowance tapered

Answer 6

If an individuals threshold income exceeds £200,000 and their adjusted income exceeds £260,000 then their annual allowance is tapered

For every £2 a persons adjusted income exceeds £260,000 their annual allowance is reduced by £1

The minimum annual allowance for 23/24 is £10,000 / £4000 PY

Question 7

What is your threshold income

Answer 7

Net income
Less any personal pension contributions

Question 8

What is your adjusted income

Answer 8

Net income
Add back occupation
Er pension contributions