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When calculating adjusted net income, which one of the following do we deduct from the net income?
1) Gross amounts of personal pension contributions PAID during the tax year, or
2) Gross amounts of personal pension contributions PAID THAT ATTRACTS TAX RELIEF (i.e. higher of £3600 or relevant earnings)?Please help me out here. I am really nervous about the F6 exam and I am trying to revise as many topics as possible at the moment.
Another doubt that I have, when calculating the adjusted income to determine the restriction of the annual allowance, do we add
1) Gross amounts of personal pension contributions PAID during the tax year, or
2) Gross amounts of personal pension contributions PAID THAT ATTRACTS TAX RELIEF (i.e. higher of £3600 or relevant earnings)to the net income figure?
I am asking all this because I do not want to lose any marks over any silly mistakes.
1) Use the amount that attracts tax relief
2) You have a rather more fundamental issue to deal with here – you do not add PPC in calculating adjusted net income!1) Thank you sir. Earlier I was looking for an example that would clarify my doubt but I couldn’t find it. I assume it is the same when calculating adjusted total income in regards to the cap on loss relief against general income?
2) Ah yes. How silly of me. I was really nervous that I wasn’t thinking straight.
Please tell me sir, I did all the questions in the revision kit and read the study text over and over again. But it still feels like the study text is not really preparing me for the exam as if ACCA will give an unpredictable question in the exam. Am I worrying too much or is this normal?
You are becoming too concerned about points of fine detail that may only be an issue in an odd MCQ – students do not fail this exam because of an individual very difficult MCQ! If you have learned from the questions you have worked then you are far better prepared than most students but in your quest to force into your mind yet more detail you run the risk of creating confusion!
You are right, I will not fail because of an individual very difficult MCQ. It’s just that, when it comes to exams, I want to aim very high and not take any risks.
Because when I aim for high 80s, I score somewhere in middle 70s.
Another reason I want to pass so badly is because I don’t want to study all over again if I fail.
Sir, what about employee contributions to occupational pension schemes? Should I deduct the amount attracting tax relief only to calculate employment income?
Employee contributions are not going to be more than 100% of relevant earnings
Actually, what I meant was what amount of employee contributions to occupational pension schemes are deductible from gross employment income to calculate the amount of employment income to be assessed in the tax year. Should I deduct all of the employee occupational pension scheme paid during the tax year or only the amount that attracts tax relief?
I had all these questions a while back but I remembered to ask them now since I am quickly revising my notes.
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