Pensions and FII

1) Some questions deduct pension contributions from employment income as well as adjustment personal allowance and of additions of band rates. In other questions pensions are now deducted from employment income…why is this??

I am not sure which questions you are talking about BUT in general there are only 2 ways in which pension payments can be made

1. DIrect from gross salary by company, this is the most tax efficient as it avoids NI and is paid gross by the employer so doesn’t feature in any tax calculation as it does not reach the point at which it can be taxed.

2. Is a contribution after paying tax on the income, eg individual has been paid, pays tax and then pays into pension scheme. Gross up the contribution and add the grossed up value to the basic rate band, the result is an extended basic rate band.

eg pension contribution 9,000 gross up =10,000
new basic rate band is 32,010+10,000= 42,010

2) i have come across questions that a company has associated companies therefore my understanding is that we do not gross up the dividends..some questions gross up the dividends even though a company has assosiated companies…again this causes confusion on when inshould gross up FII.

the question will state whether or not the dividend is received net or gross.. You always gross up the dividend in working out FII, note if a dividend is paid from an associate to it’s parent say it is not included in the FII