TX Topic Explainer: Pension contributions

In this video, expert tutor Aileen Edgar unpacks the topic of 'Pension contributions'.
#acca #taxation #tax

[@arshdeep.s.aulakh]

Explanation with the question made it very clear 😊👍💯💯

[@PP-kt5yg]

Thank you for the explanation, this is very helpful. My only question would be why the £40k excess contribution be taxed at 20% and then again at 40% - shouldnt it be just 40%? My first thought would be to ignore personal allowance and adjust basic rate to £77,700 - this would be taxed at 20% = £15,540 Remaining income of £62,300 would be taxed at 40% = £24,920 Tax liability = £40,460 (15,540 + 24,920) Example in the video shows additional £8k in tax liability resulting from the extra 20% tax on the excess £40k pension contribution. Should this really be the case? Are excess pension contributions meant to be taxed twice (at 20% and then at 40%)?

[@PP-kt5yg]

If anyone had the same query , slide at 11:10min clearly shows the excess contribution will be clawed back and there will be an extra charge after computation. Thank you ACCA 😁

[@RA-kh3un]

bit late for the reply but the basic rate band extension is £117,000 (80000+37700) it should'nt be £77700. the reason its £117,000 is because when we extend the bands we need to choose the lower of between the relevant earning (here its 140,000) and the gross ppc (which was £80000). also the excess on the pension which you have stated correctly was to be taxed at 40% since we have consumed the basic rate band

[@nikuzemukundenkasecarine5465]

Thanks a lot

[@arshdeep.s.aulakh]

Mam kindly make a video on when to claim reliefs about what is the end date of claim and when is paid ,it confuses at last 😢 time