later life pension contributions Flashcards
Adjusted Net Income
Grossed Income from all sources less deductions such as charity payments and personal pension contributions.
Net Pay Method
tax relief is given at the members highest marginal rate from gross pay.
Recycling pension lump sum
Not allowed if meets all 6 conditions-
Why Salary sacrifice
To take advantage of favourable tax/NI treatment on certain benefits
Salary sacrifice options
Bonuses/commissions
when did Annual Allowances come into effect?
6th April 2006
What is a Pension Input Period?
Pension input value is compared to the annual allowance that applies to the tax year in which the PIP ends. If it exceeds then there is a tax charge.
What is the total pension input amount?
Total made during the PIP that will be assessed against the corresponding tax year allowance (annual allowance year at the PIP end).
what is the Total pension input amount for money purchase schemes?
total gross amount of premiums paid in to the scheme- member and employer contributions- excludes contributions in last tax year where member died or benefits taken as a result of ill health
What is the annual allowance charge? (AAC)
If the total pension paid exceeds the annual allowance a tax charge is paid. This is done by adding the excess to the adjusted net income to calculate the tax payable.-either 20/40 or 45%.
How is the AAC paid?
via self assessment
when was the Annual Allowance aligned with the tax year?
8 July 2015
when did the MPAA change to £4000?
6 April 2017 or 2017/18 tax year
what is the pension tapered allowance?
Those earning more than £150,000 will lose £1 of their annual allowance per £2 earned down to a minimum of £10k. therefore those on £210,000 will have an allowance of £10k
Pre-alignment tax year- what is it?
2 PIP periods for tax year 2015-16. one from 6th April to 8 July and the other which was called the post alignment from 9th July to 5 April 2016. Each period had an annual allowance of £40k each.
