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Dear Tutor,
when the employee makes contribution to the occupational pension scheme then on the proforma do we show it as:-
Gross salary
+Other incomes
=> Total income
Less:
Qualifying interest
Employee contribution to the pension scheme
=> Net incomeOR
Gross salary
Less: Employee contribution to the pension scheme
=> Net salary
+ Other incomes
=> Total income
Less:
Qualifying interest
=> Net incomeWe use the second of your methods above – the net employment income to include on the income tax computation is the taxpayer’s salary plus assessable benefits less allowable expenses (which will include the occupational pension scheme contribution made by the employee)
Thank you.
Now in regards with the full relief provided to the employee for their contribution to the pension scheme, it is limited to the higher of:-
3600 pounds Gross contribution, and
The relevant earning for the tax year.But, what if the gross contribution made by the employee is higher than the above limit?
Will the excess amount above the limit be taxed as normal or are there any additional implications of it?Then as the note says the contribution allowable is limited as you state above and you then compare that figure with the available AA to determine whether any AA charge should apply but there is no taxability of the contribution in excess of the above limit, it is simply not available for relief.
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