Rhys Thomas (KPMG) explains how careful planning leaves a lot of scope for tax-efficient pension savings.
Pension savings under a registered pension scheme (RPS) that operates on a defined contribution (DC) basis are (essentially) taxed as follows:
Employer contributions are exempt from income tax and personal contributions (insofar as they do not exceed the member’s UK taxable remuneration) are eligible for income tax relief (ITEPA 2003 s 308 and FA 2004 s 188);
However both employer and personal contributions are ‘tested’ against the member’s available annual allowance (AA) – with any excess contributions in a tax year being subject to the annual allowance charge (AAC) at his/her marginal tax rate (FA 2004 ss 227–238). The standard AA is £40 000. This is tapered-down for high-income individuals (FA 2004 s 228ZA) although individuals can sometimes carry-forward any unused AA from the last three tax years (FA 2004 s 228A)....
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Rhys Thomas (KPMG) explains how careful planning leaves a lot of scope for tax-efficient pension savings.
Pension savings under a registered pension scheme (RPS) that operates on a defined contribution (DC) basis are (essentially) taxed as follows:
Employer contributions are exempt from income tax and personal contributions (insofar as they do not exceed the member’s UK taxable remuneration) are eligible for income tax relief (ITEPA 2003 s 308 and FA 2004 s 188);
However both employer and personal contributions are ‘tested’ against the member’s available annual allowance (AA) – with any excess contributions in a tax year being subject to the annual allowance charge (AAC) at his/her marginal tax rate (FA 2004 ss 227–238). The standard AA is £40 000. This is tapered-down for high-income individuals (FA 2004 s 228ZA) although individuals can sometimes carry-forward any unused AA from the last three tax years (FA 2004 s 228A)....
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If you do not subscribe but are a registered user, please enter your details in the following boxes:
