Tax and pensions
Barry
Registered Posts: 101 Dedicated contributor 🦉
I am involved with helping one of our staff on a clients accounts. My manager has said that tax relief on pension payments is granted on a payments basis but I remember our tutor saying that pensions were allowed relief on an arising basis, it doesn't matter when payment takes place. I'm sure my manager isn't correct but can anyone help? Also we need to deal with the deferred tax side of all this. Can anyone help on this?
Thankyou in advance.
Thankyou in advance.
0
Comments
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Barry,
I cannot answer your query directly but I've recently looked at pensions "from the other end". It appears that when pension payments are made to the pensioner they are taxed on a receipts basis. In my case a person did not receive pension payments for the period November to July. The payments commenced in July with a single payment to include arrears for the earlier months to bring the payments up to date. The pensioner's P60 (and self assessment return) did not show any payments in the year to 5th April - the entire lump sum payment was included in the self assessment return of the following year. This is more consistent with your manager's view.
Pete120 -
Hi Barry
In the UK, tax relief is generally given on employers' pension contributions in the period in which they are paid, rather than when the costs are recognised in the accounts.
Can I ask, is the pension scheme you are dealing with a defined contribution or a defined benefit scheme?
Steve0
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