Hello!
I just wanted to clear my doubts regarding pension reliefs and I'd like to use the question Anne, Basil and Chloe from Kaplan to clarify my doubt.
Here is the question :
Ann Peach
Ann is self?employed as an estate agent. Her trading profit for the year ended 5 April 2022
was £38,650. Ann received an inheritance from her aunt in October 2021 and used it to make
a contribution of £42,000 (gross) into a personal pension scheme in November 2021.
I have no issues with the answer for this but wanted to confirm how the answer will differ if :
If she had any other income that doesn't fall under relevant income category and which pushed her income above the basic rate band, will the extension be only upto (37700+38650)?
Thank you for all your efforts!
Ask the Tutor ACCA TX-UK
pensions - tax relief and AA
Whatever the allowable contribution is - given AA, then you will use the gross figure to extend both the BR and HR bands
I'm not sure what you mean by relevent income category?
By relevant income I meant relevant earnings that are used to compute the max tax relievable contributions, for instance if Ann had income from unfurnished lettings of £50000 in addition to her employment income, what would the basic rate band be?
You will find in the manual from OT or from Kaplan, a list of the types of income that are relieve at for pension purposes, for example, interest from a bank are not relevant neither are dividends.
Check out your manual
Sorry for the confusion but I'm not asking for types of income that are relevant, I'm merely asking if we should extend the basic and/or higher rate band amount by gross of personal pension contributions even if it is higher than the ( the higher of £3600 or relevant earnings) tax relief limit, if not what would the treatment be?
Yes they should extend the br and hr bands
thank you so much !!!
You’re welcome
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