Mock

Question 1

What is the threshold income and how is it calculated?

Answer 1

£200k - if greater than this then need to calculate adjusted income

Gross taxable income - Gross monthly contrs + income as a result of salary exchange - Taxed lump sum DB

Question 2

How do you calculate adjusted income?

Answer 2

Gross taxable income + Employer contrs -Taxed lump sum DB

If greater than £240k then the annual allowance is tapered

Question 3

What is the tapering annual allowance & how does tapering work?

Answer 3

Tapered Annual Allowance applies for individuals with “threshold income” of over £200k AND “adjusted income” of over £240k

By reducing the AA by £1 for every £2 of adjusted income above the limit (£240k)

Question 4

LTA excess

Answer 4

Excess taken as lump sum = 55% tax

Excess taken as income = 25% tax

Question 5

How to calculate DB accrual rate

Answer 5

Number of years in scheme / accrual rate (45/60/80) X salary = total pension

Question 6

Triple lock

Answer 6

The higher of CPI, wages and 2.5%

Question 7

Tapering

Answer 7

06/04/15 - rules introduced to reduce the annual allowance for individuals with threshold income more than £110k and adjusted income more than £150k

Since April 2020 this increased to £240k