Pensions Flashcards

1
Q

How is pension relief calcualted?

A

Extend the bands

e.g. extend the 20% band by 100/80*Contribution

So wants to contribute £32,000, the basic rate band will be extended to £67,500.

£67,500 = £37,500 + £40,000 (£32,000*100/80)

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2
Q

Employer’s contributions to an employee pensions scheme (3)

A
  • An exempt benefit for the employee (Remove from income in calculation)
  • An allowable trading expense for the employer
  • Made on a PAID basis
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3
Q

What is the maximum pension contribution made by an individual the will attract IT relief?

A

Higher of:

1) 100% * relevant earnings (Taxable trading profits + Employment income)
2) £3,600

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4
Q

What is the annual allowance for pension contribution?

A

£40,000 (Total of ALL contributions)

  • Any unused allowance can be carried forward for three years and is used on a FIFO basis, after the current years allowance has been used.
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