The Future of Pensions Advice: Part 3 – ‘Tax Relief, Annual Allowance and a pair of pension tax tools’
Check your answers
1. Gillian’s income from the tax year is made up of £95,000 salary, £1,000 of bank interest and £10,000 dividends. She makes a net relief at source pension contribution of £5,000 to her personal pension.
a. Gillian’s “adjusted net income” is £99,750 and she has a personal allowance of £12,570
b. Gillian’s “adjusted net income” is £101,000 and she has a personal allowance of £12,000
c. Gillian’s “adjusted net income” is £104,000 and she has a personal allowance of £10,570
d. Gillian’s “adjusted net income” is £106,000 and she has a personal allowance of £9,570
2. Andrew earns a salary of £30,000 p.a. He currently contributes 5% of his salary into his employer’s pension scheme under a net pay arrangement. His employer matches Andrew’s contributions. How much more can Andrew contribute personally and receive tax relief without suffering an AA charge?
3. Simon is a director of his own ltd company. He takes a salary of £10,000 each year from the business along with dividends up to the higher rate threshold.
What is the maximum personal tax relievable pension contribution that Simon can make?
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