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Hi tutor, I want to ask in Chapter 10 pension schemes, what is difference between contribution that attract tax relief (up to 3600) and annual allowance ( up to 40000)? When to deduct which? I’m confused with their explanations.
The amount of contributions that will initially attract tax relief is limited to the higher of £3,600 or the relevant earnings of the taxpayer – therefore usually relevant earnings.
If however the amount of these contributions then exceed the Annual Allowance limit for the tax year then the excess is subject to the AA Charge which effectively then removes the tax relief given on that excess amount
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