1. Contributing to Pensions

Question 1

What is a Relevant UK Individual

Answer 1

Must be:
Under 75, AND
have relevant earnings chargeable to IT, OR
be resident in UK at some time during the year, OR
have been resident BOTH:
at some time during last 5 years PRIOR to the contribution, AND
when they became a member of the pension scheme, OR
they or their spouse have earnings from an o/s Crown employment subj. to UK tax

Question 2

What are Relevant UK Earnings

Answer 2

Includes:
salary, bonus, self -employed / partnership profits subj. to IT
income from Patent rights
general earnings form o/s Crown employment subj. to IT
Benefits in kind (taxable)
PHI from employers whilst in employment
Furnished holiday lettings business

Does not include:
Dividends
Pensions scheme income

Question 3

What is tax relief limit

Answer 3

100% of relevant UK earnings, OR

£3,600 gross

Question 4

How can tax relief be claimed?

Answer 4

1. Relief at source - basic rate (GPP, PP, GSH), rest via self-assessment (gross amount added to individual’s basic rate tax band) or adjustment to PAYE code (higher / additional)
2. net pay method - Employer’s Occupational Pension Scheme

Question 5

What are the rules on Employer Contributions?

Answer 5

Tax relief depends on “wholly and exclusively” test
Dividends not taken in to account as part of ‘remuneration package’
Employee pays any excess annual allowance charge