Money In

Question 1

What attributes cause someone to be classed as a relevant UK individual?

Answer 1

One of:
-has relevant UK earnings
-are resident in the UK
-were resident in the past 5 years and when they joined an RPS
-have UK earnings from overseas crown employment

Question 2

What three methods can an individual used to claim tax relief on contributions?

Answer 2

Net Pay Arrangement
Relief at Source
Relief by Claim

Question 3

What is the maximum individual tax relievable contribution?

Answer 3

Higher of:
-100% of individual’s UK relevant earnings
-£3,600 gross

Question 4

How is the total pension input to DB schemes calculated (assuming tax-free cash is available)?

Answer 4

Pension value calculated by applying a factor of 16
PCLS value calculated and added to pension value
Total DB value is uprated by CPI
Pension value & PCLS value calculated at end of PiP and added together
Subtract total uprated DB value from DB value at end of PiP

Question 5

What is carry forward?

Answer 5

It allows an individual to add any unused annual allowance from the three previous tax years to their current pension input period.

Question 6

What are the restrictions on using carry forward?

Answer 6

-Must have been a member of an RPS in the year unused allowance is being carried forward from.
-Member can only receive tax relief on their contribution if it at least matched their UK relevant earnings.

Question 7

What is the test for working out if the tapered annual allowance applies?

Answer 7

Does threshold income > £200k?
If yes, does adjusted income > £240k?
If yes, then AA reduces by £1 for every £2 above £240k down to a minimum of £4,000.

Question 8

What is the difference between threshold and adjusted income?

Answer 8

Threshold is the individual’s gross income minus any individual pension contributions paid, whereas adjusted is the individual’s gross income plus any employer pension contributions paid.

Question 9

What are the trigger events for the MPAA?

Answer 9

Taking an UFPLS
Commencing a flexible lifetime annuity
Drawing down income from FAD
Exceeding capped drawdown income limit

Question 10

Does the MPAA affect DB schemes?

Answer 10

No, they can still use the standard annual allowance

Question 11

How long does the member have to notify other schemes once they’ve received their flexible access statement?

Answer 11

91 days

Question 12

In what situations does the AA test not apply?

Answer 12

In the year of death
On diagnosis of a serious illness

Question 13

Who is responsible for paying the annual allowance charges?

Answer 13

The scheme member

Question 14

In what situations can a scheme member request that the scheme pays the annual allowance charge?

Answer 14

If AAC exceeds £2k
Total amount of pension savings in the scheme has exceeded the relevant AA

Question 15

Employer contributions to a member’s pension are unlimited, provided they meet what set of rules?

Answer 15

Wholly & exclusively

Question 16

Do employer pension contributions get included in an individual’s total pension input?

Answer 16

Yes

Question 17

What is the process for determining the spreading of tax relief?

Answer 17

1. Is the contribution in current accounting year greater than 210% of the previous accounting year?
2. Is the excess contribution in current accounting year greater than £500k?
3. Determine which band the excess contribution fits into:
   Between £500k and £1m - 2 years
   Between £1m and £2m - 3 years
   More than/equal to £2m - 4 years

Question 18

When must the scheme member notify the scheme that they want them to pay any annual allowance charge?

Answer 18

Earlier of:
-31st July in the year following the tax year in which the AAC became due
-Before benefits are due to be taken