Slightly off topic, and not within the syllabus. (maybe in P6)
Say someone has made contributions collectively of £1m into a pension plan. When it comes to being paid it.. will they get the complete £1m (over however man years) or is a fee taken from it?
Also are pensions income taxed? Is it treated in the same way as Non-savings income?
Ask the Tutor ACCA TX-UK
Pension's
Under the existing legislation when a taxpayer takes his pension, up to 25% of the fund may be taken as a tax free lump sum with the balance being used to purchase an annuity which will be the annual pension payable for the rest of the taxpayers life. This pension will indeed then be taxed as non savings income along with any state pension.
If the taxpayers pension fund exceeds a lifetime allowance of £1.5M there will then be a tax charge on the excess at different rates depending on whether the taxpayer wishes to withdraw cash or use it to acquire an annuity.
For F6 you simply need to be aware that there is a lifetime allowance!
Thank you for explaining!
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