Correct me if I am wrong: excess contributions are taxed last, after dividends, at the non-savings rates rather than after taxing non-savings income. We only need to use the non-savings rates and add the Annual Allowance charge to the income tax liability. Therefore, we calculate the income tax in the normal way and then calculate the Annual Allowance charge.
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Annual Allowance Charge
22d ago#1You're correct.
The excess of Total Pension Inputs over the Annual allowance is not included in the body of the Income Tax computation but instead is taxed at non-savings rates (after the normal calculation of Income Tax on taxable income (and so after dividends)) and is an extra amount added to the Income Tax liability.
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