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For example, for 2014-15 a self-employed person has taxable income of £200,000. She paid gross personal pension contributions of £54,000 in respect of her pension input period ending on 5 April 2015, and no brought forward relief is available – so the surplus amount is £14,000 (£54,000 – £40,000). The higher rate band will be increased to £204,000 (£150,000 + £54,000), so £4,000 (£204,000 – £200,000) of the surplus amount is taxed at the higher rate of 40%, with the remainder taxed at the additional rate of 45%. Therefore the annual allowance tax charge will be £6,100 ((£4,000 at 40%) + (£10,000 at 45%)).
please, are we not extend the basic and higher rate bands by the gross amount of personal pension contributions. please help me out
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