TX-Ch-6 (Pensions)

Which TWO of the following statements about relevant earnings are correct?

• Individuals can always make gross pension contributions of £3,600 in 2022/23 even if they do not have any relevant earnings in that tax year.

• Relevant earnings relate both to contributions to personal pension schemes and to occupational pension schemes.

• If an individual makes pension contributions less than relevant earnings in a tax year, the excess can be carried forward for three years and used to cover pension contributions.

• Relevant earnings do not include income from furnished holiday lettings.

Identify, by clicking on the relevant boxes in the table below, whether each of the following statements about the annual allowance is true or false.
(1) Employer contributions do not count towards the annual allowance.

(2) The annual allowance can be carried forward for three years to the extent that it is unused in the tax year.
(3) The annual allowance is available even if the individual is not a member of a pension scheme in a tax year and so can be carried forward.

(4) If tax-relievable pension contributions exceed the annual allowance, there is a charge to income tax.

• (1) True
  (2) False
  (3) True
  (4) False

• (1) True
  (2) False
  (3) True
  (4) False

• (1) False
  (2) True
  (3) False
  (4) True

• (1) True
  (2) False
  (3) True
  (4) True

What is Ann's income tax liability for the tax year 2022/23?

• $15,200

• $15,300

• $14,200

• $15,100

What is Basil's annual allowance charge for the tax year 2022/23?

• $6,650

• $6,750

• $7,450

• $5,650

What is Chloe's tax relief on her pension contribution for the tax year 2022/23?

• £1,642

• £1,640

• £900

• £720

What is Ae's trading income assessment for the tax year 2021/22?

• £27,000

• £24,300

• £32,500

• £33,000

What is Cae's trading income assessment for the tax year 2022/23?

• £26,583

• £24,167

• £29,000

• £21,750

What is Eu's trading income assessment for the tax year 2023/24?

• £56,025

• £62,775

• £57,600

• £61,200

What are Eu's capital allowances for the three-month period ended 30 September 2024?

• £3,108

• £1,491

• £2,775

• £5596

Assuming that the capital allowances for the three-month period ended 30 September 2024 were £3,000, what is Eu's trading income assessment for the tax year 2024/25?

• £1,600

• £57,908

• £62,200

• £67,708