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Hi, have a question for Paper F6

0 Votes
Hi, have a question for Paper F6

Hi, have a question for Paper F6- Excess pension contribution is chargeable @ additional rate only or at the rate that becomes or is applicable per taxable income? Please help! Thanks.

May 4th 2014 AN ACCA USER 330 Points

4 Replies

+1 Vote
It is chargeable at the rate in which it arises or falls for example if one has an annual income of 240,000 pounds and pension contribution of 80,000 then he will be taxed as follows:
112010 * 20%
117990* 40%
10000*45%
30000*45%
May 6th 2014 AN ACCA USER 360 Points
0 Votes

So does the annual charge go anywhere in the 3 columns of the income tax comp, or does it only appear in the tax calculation at the bottom?
Also, shouldn't the tax bands only be extended by £50,000(annual allowance) rather than £80,000?
Thank you.

May 6th 2014 AN ACCA USER 190 Points
Reshown May 8th 2014 AN ACCA USER
0 Votes
The annual charge doesn't comes under the 3 columns for income tax computation as long as it is not an occupational pension scheme( as in that case it will be deducted from gross salary)
May 7th 2014 AN ACCA USER 330 Points
0 Votes
And the tax bands will get extended by 80000 instead of the limit. However the diff such as in this case 30,000 would be chargeable at the rate thats appilcabl
May 7th 2014 AN ACCA USER 330 Points
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