Personal tax - pensions

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Can anyone explain how to deal with different pensions in personal tax? - I am getting confused!

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Personal tax - pensions

    for tax year 04/05<BR><BR>Personal Pensions - increase the upper limit basic rate tax band<BR>eg if A Somebody pays £2000 gross per annum, the new upper limit basic rate tax band would be £31400 + £2000 (dealt with the same way as a Gift Aid donation) <BR>(Maximum contribution depends of employees age etc - also earning cap of £102,000 for Tax Year 2004/05)<BR><BR>Occupational Pensions - deducted from non-savings (earnings for employment) in the tax computation<BR>eg<BR>A Somebody<BR> Non-Savings <BR>Salary 25000<BR>Pension contribution (2000)<BR><BR>(Maximum contribution that can be made to obtain tax relief is 15% of Net Relevant Earnings (NRE)<BR><BR>That's my understanding of it anyway!<BR><BR>Hope it helps!<BR><BR>Fiona
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Personal tax - pensions

    Occupational pensions are a 'tax nothing'. They are deducted friom earnings before tax is calculated, thus gaining tax relief at whatever the marginal rate of tax is. You may hear people talking about 'gross gross' salary, i.e. gross pay before pension contbn. and 'gross pay', pay after pension contbn. The maximum Ee's contbn. is 15% of earnings fron that empoloyment. Net relevant earnings are only of concern in calculating the contrbn. into a personal pension.

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