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1.is there difference between charitable donations we use to extend basic rate tax and the donations we deduct from employment income? it is really confusing . how do we know either it is deducted from income or used to extend band
2. difference between gross personal pension contributions to calculate ANI and contributions to employer’s occupational pension scheme deducted from employment income..
When a tax payer has made any gift aid donations or personal pension contribution it affects two areas..
1. Basic income limit of 31,865 gets extended by the grossed amount of Gad or Ppc
2. The income limits for personal allowances for all age groups gets extended by grossed amount of gad or ppc.In order to calculate personal allowance, you can follow either of 2 methods
1. Adjust net income method…
ANI = total income – gross amount of gad or ppc
If ANI exceeds 100,000 ….1 pounds gets reduced from pa for every 2 exceeded…..
Rest you know…2. Extending income limit…
Income limit for personal allowance is 100,000 suppose I paid gross gad of 10000
So income limit is 110000
As the limit exceeds 100000, for every 2 pounds exceeded 1 pound gets reduced from pa amount.
Rest you know…In order to calculate you needn’t always extend income limit as mentioned in step 1. But for computation of income tax liability you have to extend 31,865
Anyone can make a contribution to Ppc, contribution to employers occupation pension fund can only be made by an employee working under employer. This contribution is reduced from your salary to arrive at employment income
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