View more on these topics

The Technical Quiz: 2 May

To help you to keep up with the fundamentals of tax, retirement and financial planning, try answering these questions . Answers below.

The Technical Quiz MM 480

QUESTION ONE: When considering the recycling of PCLS, it can only apply where the total value of the PCLS (including any other PCLS amounts taken in the previous 12-month period) received by a member exceeds:

A) 5% of the standard lifetime allowance

B) 1% of the standard lifetime allowance

C) £15,000 in the current tax year

D) £18,000 in the current tax year

QUESTION TWO: One of the tests relating to the “recycling of PCLS” is that there has been a “significant increase” in contributions as a result of taking the PCLS. This is defined by HMRC as an increase of at least:

A) 20% measured by reference to the tax year in which the PCLS was taken and the following two tax years

B) 30% measured by reference to the tax year in which the PCLS was taken and the following two tax years

C) 20% measured by reference to the tax year in which the PCLS was taken and the previous and following two tax years

D) 30% measured by reference to the tax year in which the PCLS was taken and the previous and following two tax years

QUESTION THREE: One of the conditions for the recycling rule to apply is that there is a “significant increase” in the amount of contributions paid. As a rule of thumb, HMRC accepts that such a significant increase does not occur unless, because of a pension commencement lump sum, the amount of the additional contributions are more than:

A) 20%

B) 25%

C) 30%

D) 33.33%

QUESTION FOUR: When considering whether PCLS recycling applies, HMRC will look to see if there has been a significant increase in contributions made by:

A) The member only

B) The member or the member’s employer only

C) The member or a third party only

D) The member, a third party or the member’s employer only

QUESTION FIVE: Where it has been determined that recycling applies, which one of the following statements is correct?

A) The increased contributions are treated as an unauthorised member payment

B) The increased contributions will suffer an annual allowance charge

C) The PCLS will be treated as an unauthorised member payment

D) The PCLS will become subject to an income tax charge

Questions supplied by Technical Connection

_________

Answers

1 B
2 D
3 C
4 D
5 C

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment