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Pension Tax Calculations

Pension portfolio is showing £99k with tax relief of £24k. Salary and other income is £243k

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My calculations are 243k-2k (personal allowance)= 241k taxable income. So if pension tax relief is claimed basic rate will be £158k. My quesions how to use annual pensional allowance of 40k carry forward from last 3 years each? When tax relief is mentioned on pension document is it ok to increase basic tax rate Or need to check some thing else as well? Right i am getting tax credit of 20k in my calculations. This is personal single payment contribution in the year.

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By Not Anonymous
15th Jan 2020 09:52

Have you considered the tapered annual allowance contribution limit?

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By Accaols
15th Jan 2020 10:42

Not Anonymous wrote:

Have you considered the tapered annual allowance contribution limit?

Hmm i see so both adjusted and threshold incomes are higher so tapered allowance will be minimum 10k (243-150=93k )?
Thanks for pointing it out

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By Matrix
15th Jan 2020 12:50

You will need to calculate the annual allowance for the 3 prior years which may also be £10k if the income was similar. A charge will arise if the annual allowance was exceeded.

You also need to check the earnings each year since, if most of the income is dividends and a low salary, then the maximum gross pension contribution would be limited to the earnings (the salary).

Did they take advice before making the payment?

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By Accaols
22nd Jan 2020 07:47

Matrix wrote:

You will need to calculate the annual allowance for the 3 prior years which may also be £10k if the income was similar. A charge will arise if the annual allowance was exceeded.

You also need to check the earnings each year since, if most of the income is dividends and a low salary, then the maximum gross pension contribution would be limited to the earnings (the salary).

Did they take advice before making the payment?

annual allowance covers the whole pension contributions

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By SteLacca
15th Jan 2020 10:56

And what £2K personal allowance? (Or are you referring to the dividend NIL rate band, which is not a deduction from income).

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By Not Anonymous
15th Jan 2020 13:06

SteLacca wrote:

And what £2K personal allowance? (Or are you referring to the dividend NIL rate band, which is not a deduction from income).

Could be but with exact figures it could equally be Personal Allowance due to a much reduced ANI (in comparison to the taxable income).

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By Accaols
16th Jan 2020 05:52

SteLacca wrote:

And what £2K personal allowance? (Or are you referring to the dividend NIL rate band, which is not a deduction from income).


This is reduced Personal Allowance calculated after considering 243k-124k(pension contribution +tax relief)-100k
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By Matrix
16th Jan 2020 17:28

Please would you confirm you have seen my earlier post, I believe there is a pension charge which is either paid through the tax return or the pension scheme.

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By Accaols
22nd Jan 2020 07:52

Matrix wrote:

Please would you confirm you have seen my earlier post, I believe there is a pension charge which is either paid through the tax return or the pension scheme.


yes i have seen it thanks
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