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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
You have mentioned in starting the amt. 54000 is already gross.