Topic 9&10 Flashcards
Excluding any employer’s contribution, what is the MAXIMUM percentage of UK earnings that an employee can contribute to a personal pension plan?
A. 100%
B. 78%
C. 40%
D. 25%
A. 100%
Which one of the following items would usually be used to calculate the maximum permitted contribution payable to a personal pension plan?
A. Date of birth
B. Employee’s highest rate of income tax
C. Class 1 NIC record
D. UK earnings
D. UK earnings
What is the HIGHEST rate of tax relief in total that can be granted to personal pension contributions?
A. 100%
B. 20%
C. 40%
D. 45%
D. 45%
Which one of the following is TRUE of the tax relief available for an individual’s contribution to a personal pension plan?
A. They will receive tax relief up front at their marginal rate
B. They will receive basic rate tax relief up front and any higher rate relief via self-assessment
C. Relief is restricted to 10% for starting rate taxpayers
D. Nil rate taxpayers cannot receive tax relief on contributions
B. They will receive basic rate tax relief up front and any higher rate relief via self-assessment
After taking the tax-free cash sum, a personal pension plan holder would often use the balance of the fund to buy:
A. an annuity
B. A pension income bond
C. A FSAVC
D. Compulsory retirement contract
A. an annuity
A client’s personal pension plan fund at retirement is £150,000. What is the MAXIMUM available as a tax-free cash sum?
A. £24,000
B. £32,000
C. £40,000
D. £37,500
D. £37,500
The open market option enables the plan holder to:
A. move his pension fund between providers in order to get the best investment return before retirement.
B. move the accumulated fund at retirement to the provider which will provide the best annuity rate.
C. have more than one personal pension plan with different providers, in order to get the best returns.
D. accumulate his fund with one provider but get personal pension term assurance from another.
B. move the accumulated fund at retirement to the provider which will provide the best annuity rate.
How is the income from a pension taxed in retirement?
A. As earned income
B. As unearned income
C. As investment income
D. It is tax free
A. As earned income
If a customer is contributing to an occupational pension scheme and wishes to also start a stakeholder pension, what is the maximum amount of income per annum that they can have earned in the last year?
A. £3,600
B. £17,010
C. £24,300
D. No limit
D. No limit
Julia is a higher rate taxpayer. She understands that she pays her pension contributions net of tax relief to the product provider and has to reclaim the remainder from HMRC. At what rate is this additional relief reclaimed from HMRC?
A. 18%
B. 22%
C. 40%
D. 20%
D. 20%
Which of these statements is INCORRECT in relation to an ISA?
A. The maximum contribution per tax year is £20,000.
B. Joint ISAs can now be taken under the new rules
C. Growth of the fund is tax free in the hands of the investor
D. Dividends paid into an ISA are paid without deduction of income tax
B. Joint ISAs can now be taken under the new rules
Colin is paying £100 per month to the cash element of an ISA in this tax year. He is considering using the equities element to the ISA. What is the maximum additional amount he can pay into the ISA this tax year?
A. £18,800
B. £20,000
C. £3,600
D. Nil
A. £18,800