Pensions

Question 1

How do you treat a PPS contribution in the income tax working?

Answer 1

Gross up 100/80 and extend the BRB

Question 2

How is OPS contributions treated for employment income of the employee?

Answer 2

It is exempt

Question 3

How is OPS treated for company expenses?

Answer 3

It is an allowable expense

Question 4

How is OPS treated in the income tax working?

Answer 4

It is subtracted from NSI, no need to gross up

Question 5

What are the maximum gross pension contributions that will attract tax relief?

Answer 5

Higher of:

• 3600
• 100% x relevant earnings

Question 6

What are relevant earnings?

Answer 6

• taxable trading profits
• employment income
• furnished holiday accomodation

Question 7

What is the annual allowance for pensions?

Answer 7

40000

Question 8

Can the annual allowance be carried forward?

Answer 8

Yes

Question 9

What is the annual allowance charged?

Answer 9

Excess is charged at the rate of any of the remaining bands

Question 10

When is the annual allowance restricted?

Answer 10

• threshold income > 110k

- adjusted income > 150k

Question 11

How do you calculate threshold income?

Answer 11

Net income

Less gross PPS

Question 12

How do you calculate adjusted income?

Answer 12

Net income
Employee’s OPS cont
EMployer conts into any scheme

Question 13

How is the annual allowance reduced?

Answer 13

(adjusted income - 150k) x 50%

Cannot go below £10k