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Hi tax tutor, I just want to clarify the answer to the above question. With example (a) we gross up the cash payments made and with example (b) Osbourne, we do not gross up the payments I just wanted to clarify that if we are told that cash payments are made then we are required to gross up, /80*100 and this was not necessary with Osbourne since we are told that he made GROSS personal contributions. Thank you in advance. Angela
Correct it is all about reading the precise wording of the question. Personal pension contributions are actually paid net – hence paid 8,000 = 10,000 gross and it is the gross figure we require to use in our calculations. Frequently, however in exam questions they tell you the amount paid but state that it is the gross figure – they’ve done the grossing up for you!
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