2

Tapered annual allowance calculation

• JSS - Words Fail me re Complicated process

I've only had to do half a dozen of these and I struggle every time...

So a client has a salary of £200,000 from an employment that started in 18/19.  They pay £15,000 of pension conts. through their salary and their employer pays £5,000.  Their taxable income that will appear on their employment pages is therefore £185,000.

They make further private contributions outside their salary of £8,000 net (£10,000 gross).

They also have dividends of £5,000.

So their 'net income' is taxable income of £190,000.

For the threshold income, I start with the £190,000 and deduct the £10,000 contributions, then add the £15,000 pension payments, getting £195,000.

The client therefore gets £10,000 of pension allowance.

There are soooooo many places above I'm not sure about it is unreal...  I've read 3 different guides and have 3 different ideas as to what should be included where.  It feels like the end result for the adjusted income should be the client's total income for the year, being the amount they were paid/received in dividends, plus the amounts they were paid but gave straight to a pension before tax was paid, plus the amount their employer paid for them.  Basically gross pay plus employer contributions.  Which is what I get.  But (my own brand of) logic don't always enter into it...

Save me wondering every time I do one, is the above correct?

Thanks all...

Replies (2)

By cohen
23rd Sep 2020 14:02

Looks correct to me.

I get Threshold income £195k and Adjusted income £210k. Tapered AA for 2019/20 £10k.

Thanks (0)
By Constantly Confused
24th Sep 2020 07:52

cohen wrote:

Looks correct to me.

I get Threshold income £195k and Adjusted income £210k. Tapered AA for 2019/20 £10k.

Thanks, at least if I'm wrong I now have company :)

I really don't like these stupid calculations...

Thanks (0)