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Sir we the tax relief for total gross contribution by individual is the lower of
Gross contribution and
Maximum annual amountMy doubt is
For eg if an employee contributes
25000 to personal pension contribution
25000 to occupational pension contributionAnd his relevant earnings are 100000(1 lac)
Now as per rule we will get tax relief on lower one i.e. 50000(25000+2500)
What i don’t understand his how will we obtain the tax relief
Like what we will deduct from the employment income will it be 25000 or 50000?
And on what amount will we get basic rate tax deducted at source
25000*20% by hmrc or
50000*20% ??
Also if the maximum tax relief amount was to be 3600 how will we apportion it between personal and occupational pension contribution by employeeIf the individual contributes to the occupational pension plan – see page 92 for rules and illustration. Tax relief is given at source – directly from gross wages and therefore full tax relief is obtained.
If they contribute then to a personal pension scheme – rules page 91.and page 27
Then sir why we include contribution to occupational pension scheme by employee to calculate the tax relief if we have to give full tax relief
Like if the gross contribution to occupational pension scheme is 5000
And the maximum annual amount is 3600
What will be deducted from employment income
??Firstly, I’m not a sir!
Secondly, this information is clearly outlined in the manual and you should read it.In illustration 1the manual has written the condition of maximum annual amount and it is EMPLOYEE CONTRIBUTION TO OCCUPATIONAL PENSION
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