PLTX FA2016 AAT

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LouboutinLou1
LouboutinLou1 Registered Posts: 27 Regular contributor ⭐
in Personal Tax
Hi All,

Has anyone else struggled with this question;
Assessment 1, Task 8, part b
Ruby has total income of £105,000. She wants to pay into her private pension scheme so that she can protect her full personal allowance of £11,000. She therefore needs to pay at least ? into her pension.
The correct answer is £4,000.?

Many thanks,

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  • fournaanjez
    fournaanjez Registered Posts: 32
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    She'll be paying into a private/personal pension scheme so the contribution will be grossed up from £4000 (80%) to £5000 (100%) when calculating adjusted net income for the personal allowance comp.

    Adjusted net income = £105,000 - Gross pension contributions
    = £105,000 - £5,000
    = £100,000 thus losing no personal allowance.

    Hope this helps.

    If you have any queries about it or I haven't explained it very well let me know and I'll see if I can elaborate.
  • LouboutinLou1
    LouboutinLou1 Registered Posts: 27 Regular contributor ⭐
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    That's great thank you, I knew it was something to do with the £5,000, but my answer was always more.

    Thank you so much

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