Property income and Pension

Question 1

Max age for pension and min age for claiming? What is the max one can withdraw?

Answer 1

75 and 55

Can withdraw lump sum. Max is 25% of value of fund (capped at £268,275)

Question 2

Give the two types of pension scheme and describe

Answer 2

Occupational pension scheme and personal pension scheme

OPS- set up by employer for employee. Min contributions of 8% qualifying earning of which employer pays 3%

PPS- run by financial institution such as insurance company or bank (available to anyone). Contributions made by contributions by individuals and 3rd party (spouse/employer)

Question 3

What is a money purchase scheme and defined benefit scheme?

Answer 3

MPS relates to both OPS and PPS. Money received relates to investments

DBS relates to OPS. Money relates to level of earning of employee)

Question 4

How is income tax relief given for OPS and PPS?

Answer 4

OPS- deducting contribution from employee salary before tax calculated under PAYE

PPS- same as gift aid
Relief given at source by contributions being made net of the basic rate of tax at 20%
HMRC pays amount = to basic rate of tax into tax scheme

Question 5

What is the maximum gross pension contribtuion that attracts income tax relief?

Answer 5

higher of:
o Relevant earnings (TTP + employment income)
o £3600

Question 6

What is the annual pension allowance?

Answer 6

Overrides limit for pension contributions and considers pension from all sources

Max of £60,000, Allowance can be carried forward for three years using FIFO after current years annual allowance used