Pensions – Maximum Annual Amount

Hi everyone,

This is my first post on here and I really need some advice.

I’m currently working through a practice question about the maximum annual amount of tax relief available on a PPC.

The person in the question has received ‘relevant income’ of £134 000 during the tax year 2016/17 and has also paid a gross PPC of £35 000 during the same tax year.

Under the maximum annual amount rules, I answered the question by saying he could not contribute any further amounts as PPC during the tax year and still expect to gain tax relief on any additional sum.

The answer says the man could pay a further £99 000 of contributions and still get tax relief on the additional sum (£134 000 less £35 000).

I’m very confused because my understanding is that no further tax relief would be available to him beyond the £35 000 contribution, as under the maximum annual amount rules, the tax relief is the lower of relevant earnings and gross PPC.

Can anyone explain?

Many thanks

Mark