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5. If charles had made payments of 6880 into personal pension scheme during the tax year 2018/2019.
State wthr true or false.
His personal allowance would have increased by 4300 in the tax year 2018/19. The kit says thus statement is true.
The PA will be reduced by certain amount if ANI is greater than 100000 right?? Hows is the statement 4 true??
I do not have the Kaplan Kit to look at all the question information but if ANI is between 100,000 and 123,700 the PA is reduced by 50% of the excess above 100,000.
Thus if both the Net Income and the ANI of the taxpayer was 108,600 the PA would be reduced by 4,300 = 108,600 – 100,000 = 8,600 x 50% = 4,300.
ADJUSTED net income is after deducting the gross amount of personal pension contributions (PPC), so if the taxpayer made a PPC contribution of 6,880 then the gross PPC would be 6,880 x 100/80 = 8,600
Therefore if a taxpayer had net income of 108,600 and made a gross PPC of 8,600 the PA would NOT then be reduced by 4,300.
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