PTC question - re Pensions

speegs

Hi

Please could someone tell me. If a person has a salary of £20000 and they contribute 5% into their company pension plan, what figure appears in the "payments from P60 (or P45)" box on the employment pages of the tax return.

Is it £20,000 or £19,000?

If it is £19,000 then there is a mistake on the June 2007 PTC paper in the answers.

Thanks

Speegs

AdamR

As far as my memory and my textbook are concerned, box 1.8 that you refer to should have the gross pay minus occupational pension contributions and anything under a payroll giving scheme. In your example above, the 19,000 should be shown and yes the answer does appear to be wrong. Hope the papers weren't marked on that figure!

speegs

That's weird because since I got home this evening I checked this out on the HMRC website.

It appears that the figure in this box needs to be the figure found on your P60. So I checked out my P60 and all my payslips (bearing in mind I put into an occupational pension scheme) and it appears to be the gross figure without the pension contributions deducted that goes in this box.

I am so confused.

AdamR

Lol well i've always found the AAT consistent with HMR&C (not!) If you don't show it there you'll get taxed on it though so i don't think you have a choice. Take it off box 1.8 and wave your textbook under the revenue's nose if they complain!

AdamR

http://www.hmrc.gov.uk/worksheets/sa102-notes.pdf
page 2 - income not to be included on the employment page... lists pensions and payroll giving and a couple of others. also at the top of page 3, it reads
"The box 1 figure is the pay figure after any contributions to your employer’s pension scheme (sometimes described as superannuation). Take care when copying this figure from your P60 to the Employment page."
As usual takes a while to find an answer (and if i kept looking i'd probably be able to argue the opposite!) But i think it's all there - box 1.8 (2007 style return) should be gross minus pension.:thumbup1:

speegs

Hi Adam

You are correct. My tutor has also just confirmed it.

I am on a high today as I got 88% in my mock exam for PTC. I hope that is good enough to pass on the actual in June.

Thanks for your help.

Sara

AdamR

Thats a good score you've got a right to be pleased!
I think one of the key points with the tax exams is to be confident in yourself (without being complacent mind you) as they are really open to causing panic..! I know members of my class worried about remembering how to use the different rates and working out benefits etc but they all got through in the end by staying calm and being rational. That's not to say they're a doddle though you need your head pretty well stood on your shoulders!
Good look with the revision and your June exams anyway and let's hope the chief examiner can suggest the right model answers for June 2008!