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Blossom earned £132,500 in the tax year. She made a cash contribution to a personal pension scheme of £20,000.
What are Blossom’s basic rate band and higher rate band limits?
A. BRB: £62,700 and HRB £150,140
A. BRB: £57,700 and HRB £150,140
A. BRB: £62,700 and HRB £145,140
A. BRB: £57,700 and HRB £145,140The correct answer is A.
However, her ANI is £107,500 and so her taxable income is £98,680 therefore, she should be a higher-rate taxpayer and that only the BRB should be extended.
Can you please explain why the HRB is also extended?Thank you.
Sorry, I have made a mistake with taxable income. It should be £123,680 (£132,500-£8,820) and she’s still a higher-rate taxpayer.
when a contribution is made to a pension scheme both rate bands are extended.
So for pension scheme, both rate bands are extended for higher-rate taxpayers whereas gift aid donation, the BRB is extended for higher-rate taxpayers and BRB and HRB for additional taxpayers?
But as she is a higher-rate taxpayer, her taxable income is below the HRB and increasing the HRB has little use, doesn’t it?
Please help me clarifying this.
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