Pensions Flashcards
What - intro
An individual can save towards their pension by making contributions each year. The contributions will receive tax relief up to the annual allowance e
Plus any growth within the pension fund is not subject to tax eg. Interest or dividends received
Who else can contribute
Employers can contribute this is an exempt benefit
How is relief claimed x2
At source - the pension contribution will be taken from the gross pay. Therefore relief given at source
Under a net pay arrangement - the pension contribution are made net, HMRC then top up the contribution by 20%
Higher rate taxpayers recover relief by having there rate bands expanded
What is the max contribution
The max contribution a person can make is the higher if
£3600
Or their relevant income (employment income, trading profits FHL)
What is the annual allowance
The maximum amount of relief an individual can recover it up to their annual allowance the unrestricted annual allowance for 23/24 is 60,000 PY 40,000
When is the annual allowance tapered
If an individuals threshold income exceeds £200,000 and their adjusted income exceeds £260,000 then their annual allowance is tapered
For every £2 a persons adjusted income exceeds £260,000 their annual allowance is reduced by £1
The minimum annual allowance for 23/24 is £10,000 / £4000 PY
What is your threshold income
Net income
Less any personal pension contributions
What is your adjusted income
Net income
Add back occupation
Er pension contributions
What is the pro forma for unused annual allowance
Contributions
CY AA
Unused
Excess contributions
Ty used
Ty used
Explain unused annual allowance
Can use unused annual allowance from any of the three preceding tax years as long as that individual was a member of a registered pension scheme. AA from the current year is used in priority then on a first in first out basis.
