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ACCA F6 Kaplan Exam Kit (Valid from 1 April 2017 to 31 March 2018)
Question 84 (p 33) Patience
Information related to pension contributions:
2) During the period 6 April to 31 December 2016, Patience contributed 6% of her monthly gross salary of £3,750 into her employer’s HM Revenue and Customs’ registered occupational pension scheme. Patience’s employer contributed a further 10% on her behalf.
The answer states an extended basic rate band of 36,500 which it seems to be 32,000 + 10% * 12 * 3,750 (4,500). I understand that the annual contribution is taken into consideration as the rate bands are annual (the taxable period in the question is 9 months), is this correct? Is therefore the personal pension contribution made by the employer on behalf of the employee the contribution to be taken into consideration to calculate the extended rate band?
Thank you.
Regards
Either you or Kaplan are wrong I think here as the contribution you state is an occupational scheme for which an employee contribution reduces employment income and does NOT extend the rate bands and for which the employer contribution is exempt
For the basic rate band to be 36,500 there must be a gross PPC of 4500 (ie a contribution paid of 3,600) or less likely a gift aid payment of 3,600
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