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Hi there, I’ve just completed chapter two lectures and as advised the ACCA Finance Act 2018 technical article income tax section. I notice they mention occupational pension contribution as an allowable deduction (alongside qualifying interest/other trading loss reliefs). This is not referenced on the pro-forma so is it something I should discount or is it covered in later chapters?
It is indeed dealt with in chapters 9 and 10 – but as you will see in those chapters, occupational pension scheme contributions made by the individual (an employee) would not in fact be a separate deduction from total income like the qualifying interest and certain loss reliefs that you do see on our pro forma, but are a deduction already made in deriving the net employment income figure to include within the computation – but you are right – that statement you quote is made in the technical article.
Hi ~ Tutor
There are something confused me
please see the 2 case of UK TX past paperPetula (Mar/Jun 2017)
Each tax year since 6 April 2009 (including the tax year 2016–17), Downtown plc has contributed £30,000 into the company’s HM Revenue and Customs’ registered money purchase occupational pension scheme on
Petula’s behalf. Petula has never personally made any pension contributions. Petula adjusted income for 2013/14, 2014/15 and 2015/16 was below 150,000? In Petula case, it deduct nothing (zero) for the computation of taxable income
Dill ( Sep/ Dec 2017)
During the year 2018/19 Dill contributed the maximum possible tax relievable amount into H Plcs HMRC registered money purchase occupational pension scheme. Dill was not previously a member of pension scheme. Company made no contributions on her behalf.– Dill’s gross salary £270,000
therefore Adjusted income > 210,000 so Annual allowance reduced to £10,000? In Dill case, it deduct 10,000 of pension contributions for taxable income computation
My question is that Dill does subtract pension contributions in tax computation, BUT Why for Petula, it subtract nothing !!! why
Thanks a lot ~
Alrighty ~ I’ve figure out myself
Any pension contributions made by employer ( mostly are occupation pension scheme)
are exempt from income tax, it has been notified in BPP lecture bookPleased you managed to solve the question yourself and recognised that they were 2 different circumstances – a contribution made by the employer which is an exempt benefit and a contribution by the employee which is an allowable deduction against the employment income.
This issue is also of course dealt with in the OT study notes and lectures – have you watched the lectures?
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