question on extended basic rate

Fiorellino

June 2008 past paper exam section 1

"Joined a private pension scheme on the 1st Jan 08 and pays £195 net per month commencing 1 Jan 08"

My question is:
when calculating the net income tax payable why the extended basic rate is not applied to the £750 gross figure pension contribution?

Any advice?

swampy19

Probably because he is still paying basic rate tax. It's the higher rate tax payer that can extend the tax band width.

Swampy19