Kat, a UK resident, runs her own business and draws a salary of £1,000 each month and dividends of £30,000. She has been left a legacy of £32,000 and wants to know how much she can contribute to her SIPP, in the current tax year and benefit from tax relief. She has available carry forward in the current tax year of £24,000.
A) £12,000 net
B) £12,000 gross
C) £36,000 net
D) £36,000 gross
Emma Jo, aged 53, has fully used up her annual allowance for the current tax year (including any available carry forward). Due to an administration error, her pension provider has paid compensation of £50,000 into her personal pension plan. How will this compensation impact on her annual allowance in the current tax year?
A) In spite of not receiving any tax relief, the compensation payment will be regarded as pension input and will be assessed against her annual allowance. As her annual allowance has already been fully used for the current tax year the whole of the compensation payment will be subject to the annual allowance charge.
B) Whilst the compensation payment will be assessed against her annual allowance, it will not be subject to an annual allowance tax charge as the compensation payment did not benefit from any tax relief.
C) As the £50,000 is a compensation payment it will not be assessed against annual allowance
D) As it is not permitted for a pension provider to pay a compensation payment in this manner, the £50,000 will need to be repaid to the provider and then onwardly paid directly to Emma Jo.
Matt runs his own company and draws a salary of £12,000. He wants to know the maximum pension contribution his company can pay on his behalf and how to ascertain if it will benefit from corporation tax relief. Which one of the following statements is correct?
A) The company will benefit from corporation tax relief only to the extent that the contribution doesn’t exceed 100% of Matt’s relevant UK earnings.
B) The company will benefit from corporation tax relief provided its contribution, together with any personal contribution paid by Matt do not exceed 100% of his relevant UK earnings.
C) The company can potentially benefit from corporation tax relief on any level of contributions for an employee or former employee, subject to it not exceeding his annual allowance (together with any available carry forward) for the tax year concerned.
D) The company can potentially benefit from corporation tax relief on any level of contribution for Matt, subject to HMRC agreeing that it is paid ’wholly and exclusively’ for the purposes of the trade…
Questions are set by Technical Connection
Answers: B, A, D