I have a client who due to the fact that his income has been over £130k for the last two years is subject to these pension charge rules. I'm looking to see if someone can confirm or help me in the matter. The basics:
- income this year is £78,000
- net pension payment this year of £59,000 (so gross is £73,750)
- income in previous years are as follow: 2008/09 £170,000 and 2009/10 £110,000
- client is subject to the maximum contribution of £30,000 due to irregular contributions over past few years
From my understanding of the legislation, his excess pension contributions would be added to the £78,000 and as his total income is into the higher rate band, a pension charge of 20% on £43,750 thus creating an additional tax charge of £8750.
Is there ANY way of getting rid of this charge? Could we apply for a refund now and net it off the excess?
This special annual allowance charges is causing me a serious headache!!!
Replies (3)
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there is no way around the charge.
I suggest you sit in a quiet room for a couple of hours.
have a look at hmrc manuals which are good at explaining it.
start here;
http://www.hmrc.gov.uk/manuals/rpsmmanual/RPSM15100010.htm
good luck.
I would say that with the figure provided the IFA who advised this should be feeling a bit guilty at the moment.