Flashcards
Pension Calculation - Contribution Stage
Flashcards do conjunto (10)
- 1Relevant UK earnings include: 1, employment income including bonus and overtime 2, Income from trade, vocation or profession, holiday lets 3, Patent rights treated as earned income 4, Earnings from overseas Crown employment subject to UK taxRelevant UK earnings does not include:
1, Dividends - treated as investment income
2, Bank interest - treated as savings income
3, - Rental income - treated as investment income - 2Employer contribution tax relief rules: 1, paid gross 2, Ltd company eligible for tax relief in full against corporation tax 3, Sole trader or partnership eligible for tax relief in full against income tax 4, Must pass Wholly and exclusively testEmployer contribution tax relief spreading:
1, contribution exceeds 210% of previous chargeable period AND
2, amount of excess (over 110%) is £500,000 or more
3, no spreading if increase due to cost of living rises or future service liability - 3ER contribution tax relief spreading table: 1, 2 accounting period - £500k to £999,999 2, 3 accounting periods - £1m to £1,999,999 3, 4 accounting period - £2m and more-
- 4Annual allowance calculation for DB: 1, calculate opening pension input value 2, multiply by 16 3, revalue by CPI 3, plus separate lump sum if applicable 4, calculate closing pension input value 5 calculate difference"Scheme pays" annual allowance charge conditions:
1, member's annual allowance charge liability for the tax year exceeds £2,000
2, AND member's pension savings in the pension scheme for the same tax year has exceeded the annual allowance - 5Tapered annual allowance applies: 1, threshold income for the same tax year is more than £110,000 AND 2, adjusted income for the tax year is more than £150,000Tapered annual allowance calculation:
1, every £2 of adjusted income over £150,000, the annual allowance is reduced by £1
2, can not be reduced to less than £10,000 - 6Net income calculation for tapered annual allowance purposes: 1, all income including savings interest and rental income and dividends 2, minus allowable deductions, including professional fees and EE pension contribution using net pay method-
- 7Threshold income: Net income (deduction of net pay) - Gross EE/third party contribution + Salary sacrifice after 9/7/15 - Income taxed lump sum death benefitsAdjusted Income:
Net income (deduction of net pay)
+
ER pension contributions
+
Net pay
-
Income taxed lump sum death benefits - 8Chargeable amount for annual allowance tax for contributions over MPAA = the higher of default chargeable amount and the alternative chargeable amount-
- 9Default chargeable amount = Total pension input into both DC and DB - annual allowance for current tax year plus any carry forward availableAlternative chargeable amount
=
input into DB less alternative annual allowance
+
input into DC less MPAA - 10For DC plan, contributions need to be split into two periods before and after MPAA event. If the amount after MPAA event is assessed and less than MPAA, then whole year's contributions are assessed against £40,000.
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- cii Financial Planning (Pension Calculations) FlashCards sobre Pension Calculation - Contribution Stage, criado por JING SUI em 27-09-2017.
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- JING SUI
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