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Member
Chapter 5: Policyholder taxation, Pension contracts
Are the following numerical examples correct?
Individual is a 40% tax payer
Example 1
A total of £35,000 has been contributed into the individual's pension in one year. This is split as follows:
£5,000 paid by individual, £30,000 paid by employer
Tax relief (@ 40%) is received on:
£3,600 (personal allowance) + £30,000 (as have not reached annual allowance) = £33,600
And so the remaining £1,400 is taxed at 40%.
Example 2
A total of £41,000 has been contributed into the individual's pension in one year. This is split as follows:
£5,000 paid by individual, £36,000 paid by employer
Tax relief (@ 40%) is received on:
£3,600 (personal allowance) + £36,000 (as have not reached annual allowance) = £33,600
And so the remaining £1,400 is taxed at 40%.
Example 3
A total of £50,000 has been contributed into the individual's pension in one year. This is split as follows:
£3,000 paid by individual, £47,000 paid by employer
Tax relief (@ 40%) is received on:
£3,000 (less than personal allowance) + £37,000 (remaining of annual allowance) = £40,000
And so the remaining £10,000 is taxed at 40%.
Are the following numerical examples correct?
Individual is a 40% tax payer
Example 1
A total of £35,000 has been contributed into the individual's pension in one year. This is split as follows:
£5,000 paid by individual, £30,000 paid by employer
Tax relief (@ 40%) is received on:
£3,600 (personal allowance) + £30,000 (as have not reached annual allowance) = £33,600
And so the remaining £1,400 is taxed at 40%.
Example 2
A total of £41,000 has been contributed into the individual's pension in one year. This is split as follows:
£5,000 paid by individual, £36,000 paid by employer
Tax relief (@ 40%) is received on:
£3,600 (personal allowance) + £36,000 (as have not reached annual allowance) = £33,600
And so the remaining £1,400 is taxed at 40%.
Example 3
A total of £50,000 has been contributed into the individual's pension in one year. This is split as follows:
£3,000 paid by individual, £47,000 paid by employer
Tax relief (@ 40%) is received on:
£3,000 (less than personal allowance) + £37,000 (remaining of annual allowance) = £40,000
And so the remaining £10,000 is taxed at 40%.