Tax relief and illustrations - part 2
In this lesson, you'll learn how tax relief works for pension contributions and why the treatment differs between occupational and personal pension schemes.
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In this lesson
- 0:00 Tax relief on pension contributions overview
- 0:07 Occupational pension scheme treatment
- 0:17 Personal contributions relief at source
- 0:40 Personal pension scheme treatment
- 1:35 Occupational vs personal pension comparison
- 2:11 Christian's income tax calculation worked example
- 3:25 Marginal rate relief explanation
About this lesson
You'll discover how employer contributions affect your annual allowance, how relief is given at source through the pay system for occupational pensions, and how personal pension contributions are grossed up and extended through your tax bands to give relief at your marginal rate. Through a worked example with Christian, you'll see exactly how to calculate income tax liability when pension contributions are involved and trace through where each element of tax relief comes from—both from HMRC's direct contribution to the fund and from the extension of your basic and higher rate bands. This is essential for the TX (Taxation) paper, where pension relief calculations appear regularly in both straightforward and complex scenarios.
Duration: 5m
Transcript
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